From Vox: The GameStop stock frenzy, explained
There’s been a boom in day trading and individual investing over the past several months — activity that’s often taking place or being discussed on platforms such as Reddit and Robinhood instead of in more traditional arenas. And one big question amid the frenzy has been how much the little guys really matter. Sure, small-time investors trade a lot, sometimes to the annoyance of more traditional institutions, but are they really consequential?
When it comes to the GameStop saga, at least, the answer is yes. An army of traders on the Reddit forum r/WallStreetBets helped drive a meteoric rise in GameStop’s stock price in recent days, forcing it to halt trading multiple times and causing a major headache for the short sellers betting against it and banking on the stock falling.
(Featured image is “Blowing up balloons” by JoshBerglund19 and is licensed under CC BY 2.0)
Read the whole article for the whole story, but this seems to be one of those things that is likely to turn into a *HUGE* deal at some point.
A For Real Hedge Fund out there said “we’re going to short Gamestop.”
I mean, it makes sense. One of the big things that the company does is sell used games and what with the Microsoft Game Pass and Playstation+ and Steam and all that, used games have been slowly and surely going away and the Pandemic ain’t helping.
I mean, if I wanted a used game, would I really want to buy one and risk getting the covid? Ugh. Hell no. Get it from Amazon or something.
So shorting the stock makes sense. Well, r/WallStreetBets noticed this and it looks like they’re going to manage to remain irrational longer than this For Real Hedge Fund will be able to remain solvent.
Like, having shorted it, covering the shorts will cost more than the Hedge Fund is worth.
There are a ton of questions like “is this legal?!?!?!?” and “HOW IN THE HELL DID THEY PULL THIS OFF?” and, my favorite, “is the government going to bail out the hedge fund?”Report
This is, like copyright and taxis and selling drugs and CDA Section 230, yet another example of twentieth-century regulations written to solve nineteenth-century problems proving to be not really useful for twenty-first-century situations.
Like, there’s already a law about “you can’t get together with a bunch of entities that you don’t have a clear and open business relationship with and all agree to buy or sell a particular security with the intent of manipulating its price”. Like, it’s not even a complicated law, it’s quite plain and clear. But this law doesn’t apply to “some dudes on a message board who identify themselves as, like, weedlord420(fire-emoji) and xXxHitlerBonerxXx”, because when the law was written a telephone cost more than the house around it. The idea that a bunch of completely-private citizens could organize in this way was inconceivable when the law was written, and nobody ever tried something like this until now, so there wasn’t actually a law against it.Report
Doing more research, it seems that Hedgy McHedgefund shorted 71 million shares of stock when there are only 69 million shares in existence.
And the r/wallstreetbets people noticed.
Buffet famously said “You only find out who is swimming naked when the tide goes out.”
Reddit made the tide go out.
But, as the meme goes, “that’s no moon”.
There’s likely a lot of money to be made in shorting Gamestop. (Note: This is not financial advice.)
But I imagine that it’ll be made illegal to notice that Hedgefunds are shorting more stock than exists instead of making it illegal to short that amount of stock.Report
I mean, naked shorts are illegal, so yeah, the fund should have got in trouble for it, but there’s a mechanism for that — the SEC, which already has a bunch of rules about it. And you can say “well they obviously weren’t enforcing those laws hard enough and so people had to take justice into their own hands,” and I can reply “yes, that’s what everyone says while throwing a rope over a tree to hang that guy who definitely deserves it.”Report
Unlike with the rope and tree, no one died here.
The group which got hurt is supposed to be a big player and supposed to be smart enough to not paint themselves into a corner where JimBoBob and then throw rotten food at him.
This problem looks self correcting and I don’t see the need for a new law. Smart money that was actually dumb money got hurt. In other news, don’t cover yourself with gasoline and then play with matches.Report
I’m coming at this from a different place than you but one problem the liberal-left is kind of having in the 20th century is that we are trying to take Capitalism 4.0 with Social Democracy 1.0Report
I have no idea what Capitalism 4.0 entails, or even what SoDem 1.0 really is, but I think you are right that ide idealism of SoDems is so far behind the reality of Capitalism that even with hands firmly on the levers of power, SoDems won’t have a clue how to rein in Capitalism in any meaningful way.Report
I was mainly trying to be clever and using internet speak but you got my basic gest. Even with something minor like a rideshare app, a lot of people who should know better become defenders of the traditional cab companies because of their political tribe. On LGM, we get into screaming matches whenever Uber and Lyft comes up because of some us remember why cab companies fell into disrepute with the general population.Report
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I don’t have a dog in this fight, but the idea of Reddit trolls bankrupting a hedge fund is apropos for the times we live in and it also hits the nostalgia button a bit by reminding me of Trading Places. So I hope they do it.Report
Is it wrong to kind of hope that happens?Report
There is a whole theory/practice thing when it comes to How Capitalism Works (Kinda).
The idea behind Short Selling is sound. The theory behind why you’d want to short Gamestop is sound. Hey, Microsoft Game Pass/Playstation+/Steam is Netflix and Gamestop is Blockbuster. It makes sense to bet that Gamestop is going down, down, down and soon.
But let’s say that you want to short Gamestop because of the above and then you go on CNBC and start talking about how awful the stock is. Let’s say that you get Jim Kramer to look at the fundamentals and agree that it’s a Sell, Sell, Sell.
Is that market manipulation? I mean, look at the fundamentals?
I suppose the Bill Ackman/Herbalife scuffle is probably instructive here. Bill Ackman actively tried to destroy Herbalife as he was shorting it. Carl Icahn came in and actively saved Herbalife and, eventually, Ackman stopped shorting it.
Well, in this case, r/WallStreetBets is acting like Carl Icahn.
But r/WallStreetBets is *NOT* Carl Icahn.
There’s a class of people allowed to make a quick fortune on Wall Street. You are not a member of this class.
The destruction of Melvin Capital will be sweet on the tongue.
But they will put in protections to make sure that this class of people is also not allowed to *LOSE* money.Report
I’d also think that anyone shorting a stock has put in stop/loss limits. But they might not have. Not like traders actually create money, they just transfer it around.
Reminds me of the scene from “The Accountant” where Jon Bermthal sits in the investment banker’s car and “persuades” him to stop shorting a company’s stock. 🙂Report
This strikes me as like Pets.com only deliberate.
Like, instead of “irrational exuberance”, it’s “malicious exuberance”.
It’s great that a Hedge Fund took it in the shorts, I guess, but all of those people who bought Gamestop shares now own shares in Gamestop.Report
I mean, one of the reasons there’s laws against this sort of thing is to prevent irrational exuberance from happening, to stop excited grandpas from thinking that they’ve found One Weird Trick To Beat The Stock Market and sinking the family inheritance into it.
You’re right that there’s a “class” of people who are “allowed” to do this, but that’s kinda like saying there’s a “class” of people who are “allowed” to drive on the track during a NASCAR race. Yeah sure you can argue that it seems gross and exclusive and incumbent-privileging, but it’s not as though letting any random person just roll up and drive their own car in the race would end well for anybody…Report
Here’s the thing though: is this really consumer protection in 2021 or is it a gift to the mega wealthy? Because it seems like the former (even if well intended) may have ended up being the latter.Report
Describing protections against irrational exuberance as “a gift to the mega-wealthy” is one way to think about it, I suppose. Doesn’t seem really productive to me, but, hey.
Like, these funds aren’t entirely rich-dude playthings, these are where people’s retirement money goes, these are how pension funds stay solvent, it’s how endowments for museums get income. It’s probably not a good thing to normalize the idea that some laughing jackasses on a message board can skim a mutual fund’s report and say “lol they took a short position on this stock, everybody buy a bunch of it to make the price go up”.Report
I hear you and that’s a fair point. But it does raise the important question of what these systems are really for. Think about how many people on the verge of retirement in 2008 took a complete bath through no fault of their own. You can’t just restart and wait for fatter times when you’re 70.
I’m totally open to the lesson being that high finance needs to be regulated to the greater good of consumers/regular people and the ability to do this no longer being allowed. But that’s not really what Wall Street wants. They want their casino where they get rich and the collateral damage is the government’s (read taxpayer’s) problem.Report
The fundamental problem here is that it’s not irrational to buy Gamestop stock at $X if you are pretty sure it will remain at least that high when Melvin Capital’s shorts are due and it legally has to buy all that stock.
Every single person who thinks this is some sort of thing that should be regulated has missed the point that the SEC regulates misinformation and stops misinformed investors.
But none of the people in wallstreetbets are misinformed or spreading misinformation!
This isn’t some pump and dump scheme…in a lot of ways, it’s the opposite. A pump and dump scheme dupes the last group of investor. You drive the price up, and sell to a bunch of dupes see the price skyrocketing and don’t know why. And those people lose everything when there are no buyers at that price, because the stock was inflated by nonsense.
But here…there are buyers at that price! There are buyers at _any_ price! Because the morons who extremely overshorted the thing _must_ buy it, at literally any price, when the shorts are called.
Melvin Capital pre-duped themselves. No one is being conned into buying the stock, Melvin Capital volunteered themselves as victims of this before it even started, by having such an absurd market position.
This is a _known_ danger of shorting stocks, that you technically have ‘infinite’ risk.
Well, sometimes, that infinite-loss jackpot will, in fact, be hit.Report
“[I]t’s not irrational to buy Gamestop stock at $X if you are pretty sure it will remain at least that high…”
It’s irrational if you are a retail investor (the industry term for “just some dude”) spending your own money on it, and it’s money you can’t afford to lose.
Which, like I said, that’s grandpa who thinks he’s found One Weird Trick.Report
It’s irrational if it’s just that one grandpa.
It’s more rational if it’s grandpa and 30,000 of his new friends. Then it’s Game Theory in action, IIRC.Report
A lot of those stockholders got in when it was $4, it rose up to $20, others got in, and then it was shorted to $10 and they got pissed. That actually happened months ago…it wasn’t until recently that this…situation started.
So all those people have been basically playing this game with house money. Even if somehow they missed the short window, they’re still going to come out just fine if the price goes back to normal.
Other people hopped in when they realized what was happening, and have a bit more skin in the game…but also…I’m forced to asked what ‘can’t afford to lose’ means there?
Yes, in a way, they have to ‘catch the knife’s edge’, but…it’s a _really long_ knife. It’s a knife that’s 138% of the entire stock. That’s how much is going to have to be bought to cover the shorts. It would be hard to completely miss the entire thing.
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However, people are fundamentally misunderstanding this situation, because a lot of the current stockholders aren’t even expecting to make money.
If you read the subreddit, there are a ton of people doing this out of spite. These are people who have traded stocks for years and gotten screwed by hedge funds shorting stocks and then manipulating prices, and high-frequency trading, and all sorts of bullshit. And those same entities have helped destroy the economy by buying temporarily weak businesses and cannibalizing them.
Seriously…there’s a guy on there who posted a graph showing how he bought however much GME when it was very low, and it’s now six million dollars…
…and he’s letting it ride. He could sell now, but he’s not going to…he’s going to take a risk not because he’s sure will work out, but because he wants to burn a hedge fund to the ground as a warning towards other ones that have been manipulating the market with shorts for years. Maybe he’ll make a profit during that, maybe not.
He’s not alone.Report
“I’m forced to asked what ‘can’t afford to lose’ means there?”
I’ve said it straight-out, twice, but I’ll say it a third time because you keep insisting that I’m talking about something different.
You talk about “playing with house money”. I’m not worried about those people, because they aren’t the ones who are going to sink the family fortune into shorting Gamestop. Stop telling me about how professionals know the risks and can still make money off the thing. I’m not talking about them.Report
It’s not the WSB that are spreading this thing outside of the subreddit, either.
There are plenty of people reporting the spike GameStop without any context, I’ve actually seen several articles that just seem to saying ‘A bunch of people on Reddit thought this stock was undervalued and they’re making it skyrocket’, leaving out the important fact that all this ended on Friday, and if you’re standing there with stock on Saturday, you’re screwed.
And it’s that reporting that need criticizing, not the people doing this.
And, of course, saying ‘ONly the super-rich are allowed to behave in the stock market in ways that cause unknowledgeable investors to lose all their money’ is extremely silly.
For example, the stock market has been ‘irrationally exuberant’ about Tesla for years and when it corrects, a hell of a lot of retail investors are going to lose money. And the Tesla irrational exuberance that isn’t based on the actual math of ‘Wait a second, if we stick together, we can counter this extremely shorted stock’, something that actually could work (And seems to be working!), despite being risky. No, Tesla’s valuation is based on nothing. Literally nothing. There is no possible way that company is worth that much.
For a more relevant example, GameStop probably should be at about $20. Or more. Melvin Capital tried to crash it to $10, probably so they could buy enough of the stock to seize the company and sell it for pieces. Which means…lost people half their investment, maybe more.
Complaining the stock market is where people’s investments are, and they could lose everything, and how _dare_ people behave in a risky manner…but only when that problem is being created by retail investors and not the hedge funds is….rather suspect.Report
“[S]aying ‘[only] the super-rich are allowed to behave in the stock market in ways that cause unknowledgeable investors to lose all their money’ is extremely silly.”
Saying “only the super-rich are allowed to drive cars extremely fast on the road” is extremely silly as well, and it’s exactly what we do with automobile racing.
You’re suggesting that nothing needs to happen or change here, we can just let the natural function of the market sort out the dummies and the brights, and people who lose money deserved to lose it, and I’m saying that this is a remarkably capitalist/i> attitude from you.
“but 2008!” nowhere have I said that was a good thing, sir.
“Melvin Capital tried to crash it to $10, probably so they could buy enough of the stock to seize the company and sell it for pieces.”
it is very amusing how the woke have invented the concept of white-knightingReport
Assuming that dude’s for real, he should absolutely sell.
Nobody is going to learn the lesson he wants them to learn. The lesson SOMEONE might learn is “Don’t make shorts you literally cannot cover if they go bad.”
Because as soon as big money sees you did that, they will make it go bad so they can acquire all your money.
because hey, you literally created a demand the supply literally couldn’t meet — so why would anyone not buy up as much of the supply as possible?Report
Not only are they real, but the guy who started it all is still in. Here’s his current balance sheet:
https://i.redd.it/a309gkm5yxd61.png
LOL. He bought 500 shares way back at the start of all this at $0.20 a share, then later a bunch more at $15 when he realized the short situation.
The $0.20 shares have a gain of 163,257.12%Report
High Frequency Trading actually helps the retail customer by reducing spreads.
The big fat cats hate HFT because of that so HFT gets bad press. But it’s one of these “free trade puts small amounts of money on small transactions into many pockets” things.Report
No, that’s what HFT’s claim they do.
What they actually do is probe out the bid/ask spreads on both sides, and then buy from one side at the absolute cheapest they will sell, and sell to the other side at the absolute highest they will buy.
This means the seller gets the least he’ll take, the buyer pays the most he’ll pay, and the HFT’s pocket the difference.
To hear HFT’s talk, you’d think market liquidity was a huge, unsolved problem before they showed up. Turned out it worked fine, it’s just buyers and sellers didn’t have someone extracting as much meat as possible before the trade, and wasn’t that a crying shame.Report
It’s worth noting that Reddit and WSB’s isn’t actually driving this. They don’t have the capitol.
No, what’s driving this is major investment money who recognized the same thing — Melvin Capitol put itself in a box, and all the smart money quickly started extracting all of MC’s money.
The Redditors and memers are along for the ride, and a few might even make it rich — although I sadly suspect that even in this case, the vast majority of them will end up having bought 90% of the way up and then not sold before the short expired and Gamestop’s price drops back to normal.Report
The next step I suppose is to see if the mob can coordinate a sell-off in a manner mostly beneficial to members of the mob at the expense of the short sellers forced to buy back in. For those that don’t, well, at least bankruptcy is a lot gentler than it used to be. I was telling my wife this morning if I run gamestop I’ve been up for 3 days straight with the best financial experts money can buy demanding a plan for how I come out on top of this.
To your larger point above though it’s kind of a comeuppance for the corporate raider class. The rules make sense in theory but also assume some degree of good faith or at least following rational incentives. But what happens when that class spends a few decades exploiting holes in the system, or acting rationally irrational for their own benefit? Well eventually it becomes a casino and some average joes figure out how to count cards or crack the algorithm or whatever. The real question is whether there’s enough populist energy to keep the big dogs from having the only seat at the table when the rules are rewritten due to their sad little cries, which they inevitably will be.Report
The next step I suppose is to see if the mob can coordinate a sell-off in a manner mostly beneficial to members of the mob at the expense of the short sellers forced to buy back in.
They cannot.
Carl Icahn got out of Herbalife intact and Herbalife got out intact. I know little about Herbalife (I assume they sell healthfood crap? Supplements?) but I am relatively sure that people will be buying healthfood crap and supplements in 2 years.
Is Gamestop going to be here in 2 years?
(“Raid Responsibly” is a message I could get behind, I suppose.)Report
Well, if their real long term plan was to ‘go online’ and try to fight it out with Amazon this is their big chance. But yea, retail is dead and this won’t change that.Report
Heh, axiomatically, no… doesn’t mean that some folks won’t have made a fortune… best we can hope is that the majority make some and most got in at the $4 price and not the $192 price and at worst, break even.
Chris Arnade has a number of interesting observations from the (formerly) inside… one of the things that I found curious is the phenomenon of “selling your book” which is to say you take public stances on your positions… which would seem counter-intuitively foolish if one assumes the game is played solely in $$ and not in $$+Influence+Status.
See this as a correction on Influence + Status.Report
Heh, twitter reporting that Robinhood no longer offers GME and other stocks.
Can *only* sell, not buy… is this the “coordinated exit” you were expecting?
Time to catch the falling knife.
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Damn those unregulated markets…Report
This one made me give a low whistle:
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Read: We got some very unpleasant phone calls from investors with very deep pockets who have encouraged us to be more proactive in this regard.Report
It’s definitely legal. I can’t imagine it’s harder to pull off than, well, advising people to buy a stock, right? As for the gov’t bailing them out, well I wouldn’t, but would it be a surprise if they did?Report
It’s truly a thing of beauty. It’ll be really interesting to see if the SEC has anything to say about it.
When I watched The Big Short I was ready to grab a pitchfork at the end. These guys actually did it.Report
Shorting is a good thing, when it’s right. If a stock is overvalued, that’s bad, and shorting helps bring the value closer to its correct value. The people pumping up the stock without regard to the fundamentals are the ones engaged in rent-seeking. It might also benefit the executives who have been overseeing GameStop’s poor performance, although it’s possible that the spike will be outside of the insider trading windows, giving them no chance to take advantage of it.Report
Having no skin in this game, I agree with Slade that there is some schadenfreude going on here. I also agree with Brandon that shorting is a good thing, when it’s not being used to try and drive down value prior to a buy out or similar. At $4, I don’t know that gamestop was over-valued enough to be worth shorting, but IANAFP, so what do I know.Report
We are continually reminded by the powers that be that the market isn’t rational (see record highs in the midst of record unemployment). So, a little more irrationality creeps in, but not the right kind, and all of a sudden rational is all the rage.Report
The prejudice against short-sellers may be the most pure example of shooting the messenger I can imagine.Report
Well, consider this particular price discovered.Report
They’re also now playing this game with AMC and… BlackBerry?
IF THIS RESULTS IN A DEPRESSION I SWEAR TO GODReport
I think there are a few things. Short selling is one thing but a lot of short sellers also seem to do it and then have the power to place their hand on the scales and make it happen. Sometimes it back fires, see Ackerman’s attempt to attack a supplements company as a multi-tiered marketing scheme.
If short-sellers can announce their intentions, why should people be prevented from countering those intentions? One of the Hedge Funds put out a video on why they think GameStop is over valued and needs to be shorted. It seems like a counter is possible.
I’m generally not a fan of day trading apps like Robin Hood that turn trading stocks into a video game (and it does from what I’ve read, lots of bells and whistles to make it exciting). I am also not a fan of trolls on the internet messing with the economy because I think it could lead to long term damage. But it seems to me that short sellers should not be able to do things that tip their gamble in their favor either which is what they do when large enough.Report
Melvin apparently got out.
They took a huge (undisclosed) loss, though.Report
Considering there are still just as many outstanding shorts as before, if Melvin Capital ‘got out’ it was only via passing their obligations off to other companies. Or they’re just lying…sorry, ‘misreporting’.
And then Big Finance started running a big PR campaign in a desperate attempt to tricked WSB into selling, so they can undo some of this complete mess.
But WSB isn’t selling. They are entirely aware that the outstanding shorts still exist, and are still coming due today and Friday.
It doesn’t matter who owns them. If it doesn’t take down Melvin Capital it will just take down whatever big pockets group that just bailed them.Report
The game continues over here, though:
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Movie theatres could theoretically come back after COVID. The fundamentals of the Gamestop short existed pre-COVID.Report
I agree.
I don’t think that the day traders particularly care about the fundamentals, though.
They’re just noticing who has shorted too much and capitalizing on them.
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I sincerely doubt they’re gonna catch the same wave twice, but a lot of people will go broke trying.Report
oh hey look it’s the Barbarians sacking RomeReport
Wait, wait, wait. They’re just hodling a sack.Report
Bailout talk:
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“and may need to be bailed out.”
Just perfect. So perfectly American.
Doesn’t the “theory” justifying hedge funds entail that we allow hedge funds to go bankrupt?Report
Doesn’t the “theory” justifying hedge funds entail that we allow hedge funds to go bankrupt?
When I set up my Roth IRA back in the early oughts, Maribou and I sat in the office of the lady we’d be sending our checks to and she gave us a small speech about stocks, and risks, and told us the story of the tulip mania of the 1600s.
I made a joke about shorting stock because I am That Guy and this was, apparently, a HUGE RED FLAG for her and so she then spent 2 minutes explaining that shorting stocks was an excellent way to lose all of your money and I had to spend a minute assuring her that I just wanted to pick a fairly aggressive fund for me and my family because I wanted to put money into the stock market and then JUST NOT THINK ABOUT IT for a few decades.
She assured me that that was the right attitude because too many people treat the stock market like a casino where you can only win money.
You’d think that someone would explain this to the Hedge guys.Report
The hedge guys treat the stock market as a casino where they themselves have the house advantage. Often they are right, but every so often a jackpot multiplier will come along to skew the odds. Or the long tail odds finally pay out. Or both)Report
I think the ‘bailout’ is from other hedge funds/financiers/vulture capitalists, which (tin foil hat) may also be part of the game. (Though probably not, cause as Density Duck says above, that’s totes illegal and the people involved had real skin in the game.)
(Not that financial types are too good to do anything illegal, but it’s got to be worth it)Report
That kind of bailout offends me less.
If other folks want to throw that money around, very good.
(I have a buddy who bought Gamestop at $90. I started yelling at him saying “GET THE HELL OUT!” and he told me that, no, he owns *ONE* *SINGLE* *SHARE* of Gamestop at $90. Which, I suppose, is fair. If he loses $90, he loses loses his entertainment budget for the paycheck. If he turns it into $1000 (as he assured me he will), he’s got something that he can throw into savings.)Report
A couple of explainer threads on the twitter for those who are still perplexed:
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This does nothing to dissuade me of my (ignorant) belief that the market is just Dungeons & Dragons for finance people.Report
Except one of the players is sleeping with the DM.Report
+1Report
There’s a couple of different markets — here’s just a few.
1. There’s the fairly rational market, which is basically people putting money into companies they think are profitable and will pay out dividends or otherwise rise in value. This makes money, but not fast and not a lot.
2. There’s the “basically I’m investing in the economy” market — what part depends on your level of risk, but by and large you’re basically just thinking the economy will mostly grow and the government will mostly pay it’s debt.
3. There’s the market of people predicting the first two markets (or really any market).
4. There’s the market of people predicting the prediction of #3 .
5. There’s outright gamblers, who might as well be throwing darts.
6. There’s HFT’s, who don’t so much “invest” in the market as “have acquired the ability to take a table rake and do it all day, every day, on everything”. (No, I’m not exaggerating. They exploit their ability to work inside most traders decision loops to suck as much money possible out of a transaction, and call it “improving liquidity”. The seller ends up selling at a lower price, the buyer buying at a higher price. The difference goes to the HFTs)
7. Then there’s occasionally this thing, where someone screws up with so much money so obviously that a lot of people go “Hrr, all their money go bye-bye” and got in line.
8. There’s also, of course, a lot of people using a lot of tools to lie about the market, because if enough people believe them, they’ll make money.Report
Picture a dollar spread. I.e. you can buy stock ABCD for $20 or sell it for $19.
We used to have that world. Why were the spreads that high? Well, because. The exchange was dominated by very large players and there was very little access to the market.
Then come the day traders. Rather than sell you that stock for $20, they offer to sell it for $19.99.
You get a penny more and they get the $0.99 spread.
But then another day trader undercuts them by offering it at $19.98.
And so on.
Without the HFT pushing the spread down, you lose 50 cents off of every transaction and consider it normal. Providing liquidity seriously helps the retail guys and serious players are supposed to be able to take care of themselves.Report
I’m familiar with the BS HFT’s spew to cover their rake.Report
The Gamestop episode, and the thread about telework and housing, highlights for me how precarious the financial security of most Americans is and how this warps our policy choices.
For a lot of people, their financial security is tied to their house and Wall Street. We’ve seen a lot of how people, even people who ordinarily have altruistic instincts, resort to the ugliest sort of behavior when it comes to the value of their house. And we are routinely scolded that giving away tax cuts to billionaires will somehow work like alchemy to turn an ordinary 401k into gold.
Basing the financial security of so many people on something they really can’t control, while seducing them with the promise that they can control it if only they do this or that, ends up creating really perverse incentives.Report
Up to the mid 300s now (1130 am eastern Jan 27)
If that other short position is closed out, I imagine someone is going to start looking at catching the falling knife. (Not me, I got burned – not badly just a little singed – trying to do that with bank stocks in the 2008 meltdown)Report
Diamond Hand meets Greater Fool.Report
Nokia appears to be the Next Big Thing. Not sure how this game works. Are Redditors just trolling through the short market looking for ways to bankrupt hedge funds?Report
If the answer is “yes”, I just got a shiver.Report
Me: 2nd time, this is too risky to get in early… pass
2nd Stock: Flies through roof, Redditors win
Me: 3rd time, this is too risky to get in early… pass
3rd Stock: Flies through roof, Redditors win
Me: Wow, this is really a thing… pushes in chips
4th Stock: Hedge Funds correct and crush movement
Me: Well, I didn’t need *all* those chips anyway.Report
Now they are…Report
It’s a fascinating story; I am dubious that they would be able to finagle this story into a bailout though.Report
New prediction… RoaringKitty and dozens (hundreds) go to jail on SEC collusion charges; proves that Market is, indeed, fair and free.Report
I’ll take things that would make support for armed protest bipartisan for $500, Alex.Report
I admit to having not a lot of sympathy for the hedge funds.
Then I read stuff like this:
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Counterpoint:
DEFI = decentralized financeReport
It’s a 3 tweet thread that lays out the case pretty nicely.Report
There are other narratives fighting on the twitters, though.
This is Gamergate for finance. This is why we can’t have financial aid because a bunch of basement dwellers will just take that money and use it to day trade. NO CASH FOR INCELS.Report
Russia has now been mentioned.Report
And, of course, now all good people need to take the side of the hedge funds.
Report
Cillizza offers his take:
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‘Poor people shouldn’t be able to make money in the stock market because some of those poor people are Bad People. Instead, only rich people should make that money, none of _them_ are Bad People.’ is possibly both the greatest and stupidest take I could ever imagine.
OTOH, maybe we’ll have the best possible outcome: WSB degenerates end up with tons of hedge fund money, Nazis end up holding a bunch of extremely overvalued stock in GameStop.
BTW: Eat the Rich by Kate Stephenson just came on my Spotify, heh.Report
It occurs to me if Occupy had done this and Paid off a bunch of student loans, the entire course of history would have been altered…
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I am tempted to call my broker and ask “NONE OF MY MONEY IS WITHIN A HUNDRED MILES OF THIS MEME BULLSHIT, RIGHT?”
Even as part of me wants to play around.Report
Unless THIS is your broker… or you’re seriously sandbagging your SES then, no… your money is nowhere near this. Yet.Report
OWS was clueless who their enemy was or how they operated. These guys…Report
Bingo.Report
At least a few people I know in real life are getting really enthusiastic about the ability to engage in the stock market more actively rather than putting it in a boring hedge fund or some other portfolio thanks to the Internet. Women also seem to be really into the recent enthusiasm for crypto-currency according the person I use for financial advise. Like Chip, I think the sudden enthusiasm for stock markets among many ordinary people is becuase they don’t think they will even be able to make a comfortable living doing ordinary work anymore, so they turn to the stock market to increase their standard of living. My Ex made really good money and even she was a finance enthusiast.Report
I am reminded of the 1920s when just everyday people traded stocks as if they knew what they were doing.Report
“Know what you are doing” is a bit different here. There are people who think they are genius investors when they are not. This is what makes apps like Robinhood dangerous. Here, the reddit types are purposefully trying to screw with hedge funds. They know exactly what they are doing on that score.Report
Apps like Robinhood is aware a good portion of old-fashioned state paternalism might be in order. Like sometime, you really do need to prevent people from doing dumb and dangerous things.Report
New liberal battle cry: Hedge funds are good now!Report
The more accurate argument is that hedgefunds are preferable because they are more orderly.Report
I thought the whole point of Hedge Funds was that they were the Wild West, high risk, high reward?
You know, the opposite of orderly?Report
Dumb and dangerous things like blowing up the economy by shoving all the money into sub-prime mortgage securities?Report
{{Shhh. Lee wasn’t an active investor when that happened.}}Report
From my admittedly amateur understanding of the stock market, for everyone who sells high there is a person who buys high.
I am expecting that a few lucky or clever people will get out of this enriched, a larger group will find themselves pretty much where they started, and a few who will lose their shirts.Report
My point is here that the reddittors do not seem to be acting like typical daytraders who think they can strike it rich. They seem to want to mess with the finance guys and that is a different motive. It might even be a new motive that could not exist without something like reddit in the first place.Report
Redditors as moral hazard.Report
This is one of those things that I don’t know how to feel about.
1. They’re mitigating risk!
2. The game is rigged!
Report
Next killer app – Trading that does not GAF about what Wall Street and the big places are concerned with.Report
You’ve invented pink sheets.Report
Like for realz, this was Wolf of Wall St’s business plan. He knew that he couldn’t compete with big institutional investors and financial houses, with their pre-existing relationships. So he sold off the radar stuff to retail investors.
Now, these things were off the radar because they were barely functioning, mostly has-been enterprises. And he & his crew straight up lied to people to make these trades.
What all this gamestop amc theater etc action actually is is penny stock action but on still listed companies. Which historically, is usually squashed by the exchanges before it even gets started. It used to be one of the key aspects of ‘listed’ securities.Report
This is going to end badly:
Report
“The function that
hedgfundsthe Redditor Raiders provide is similar to clearing out the deadwood so a healthy forest can grow.”ReportBtw, do any big teachers unions have their entire pension fund invested in Melvin Capital?Report
That’s the story that I’m waiting to hear.
“These day traders are stealing money from our teachers, policemen, and prison guards!”Report
from the Chicago Tribune “Melvin generally manages money for charitable organizations like endowments and foundations.” Let’s see…Report
If so, that’s major-league financial malpractice. For pension funds, as for the normal individual investor, diversification and patience is the way to go. A big player like a pension fund might put a piece of the fund in a high-risk-high-reward hedge fund, but only a small piece.Report
Thinking of Shorting GME now that its at $339.
Who’s with me?Report
I think that GME will be back around ten or twenty bucks in one year. (Note: This is not investment advice.)
Can you short for a year?
(Hell, the short calls come in on Friday. If they shorted more stock than actually exists… well, I don’t know what will happen but it’ll happen on Friday. Which may make “a year” something wildly far down the road in our new and improved attention span economy.)Report
They will pay whatever the market demands they pay….more than once.
I.e., they will a share at $300 or whatever, and then turn around and hand it to the person who, a while back, paid them $10 for it.
This person, because they not stupid, will take the stock that they got for practically free and put it back on the market, and get paid $300 for it as the shorters have to buy it _again_ to once again hand out for free.
Assuming the market hasn’t skyrocketed because these people are being forced to buy _completely massive_ amounts of a stock
I think a lot of people are underestimating the sheer of level of ‘these guys are utterly screwed’ happening here.Report
Yep. Gamergate.
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Daytrading is white supremacy. Frustrating hedgefunds is patriarchal violence. Investing in Blockbuster is heteronormative oppression. It’s all so obvious and the only reason you can’t see it is your internalized sense of privilege.Report
Just so people don’t think you’re being hyperbolic:
“Hurting Melvin Capital is, paradoxically, white supremacy.” – Michael Brandon Daugherty
This take absolutely *sizzles*.Report
The bar for hyperbole is getting higher by the day.Report
I follow MBD because, without realizing it, he’s everything he claims to hate about the left. It’s quite amusing.Report
AOC hasn’t gotten the message that this is bad:
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Someone – a REAL EXPERT – needs to say the words “AOC, ya gotta understand…”Report
Say what you will about the tenets of AOCism, at least it’s an ethos.Report
Best I got:
Report
It’s like they just forgot about 2008…Report
On the other hand, it *really is* something to see wallstreeters complain about people treating our economy as a casino.Report
And it is interesting that yet another part of Walter Jon Williams’s cyberpunk future is coming true (to wit: the climactic fight at the end of the story involves illicit stock-market manipulation to make the Meglomerate Conhugecorps lose all their money)Report
Jaybird, you ever read Micael Lewis’s story Jonathan Lebed’s Extracurricular Activities? It’s about a teenage day trader the SEC went after and their (failed) attempts to explain to Lewis what the kid did that was illegal. You’d like it. It’s here:
https://www.nytimes.com/2001/02/25/magazine/jonathan-lebed-s-extracurricular-activities.html
It’s also in Ira Glass’s collection The New Kings of Nonfiction, if like me, you can’t read that online.Report
I opened it in a private window and it’s letting me read it!
(Feb 25, 2001… sigh. That was another lifetime.)Report
It’s been a scam all along.
Report
That was one hell of a wild ride.
And, yeah. Echoes.
Capital is more sophisticated now, of course.
We now know to call Jonathan an “incel” and “racist”.Report
Damn, that Michael Lewis is a good writer.Report
From Mediaite:
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Heh… not sure if I’m supposed to say:
So much for Unity
or
This is how you get Trump.
Something like that.Report
This strikes me as an example of something very, very bad.
Like, holy crap, AYFKM bad.
I am hoping that the CEO comes out and clarifies “we’re just trying to reduce volume” or some crap like that… because if only some people are allowed to recalibrate their positions, we’re in a very bad place indeed.Report
So, question: Wouldn’t reducing ‘volume’ here make it rather difficult for the people with the shorts to cover them? Isn’t this exactly the wrong solution?
Like, the fundamental issue here is not that trading is volatile. It is a problem, a little, but not The Problem.
The Problem is there are 69.75M shares total, some of which aren’t really on the open market. And various people need to buy…uh…like 90M shares by Friday (Someone is bad at math there.) and people are sitting on almost all of the shares and simply not selling.
Oh, I’m sure a few people are selling, letting some of the shorts cycles off the books, but…not enough. And any SEC thing that reduces trade cuts into that! It’s an anti-solution.
Or maybe the theory is that if the SEC only allow certain people to buy, and everyone else can still sell. Is that legal? Well, even if it is legal, people are just not going to start selling!
If shareholders don’t want to sell, the SEC cannot make them. The SEC can’t just _steal_ people’s stocks.
Maybe the SEC will try to invalidate the shorts? I think the people who _bought_ the other side of those, months ago, and are now looking at an absurd return on investment will have something to say about that.
I am baffled as to what people think the SEC’s solution even could be. There is not a way out of this. Party A entered into an obligation with party B, promising to buy X, at any cost, in a date in the future, and the third party C, the suppliers of X, are simply refusing to sell it at any reasonable cost.
I mean, if this wasn’t stock, there’d be anti-trust issues, but trying to enforce anti-trust laws against stock would be…hilarious, to say the least.Report
Dude, don’t ask me.
Ask the CEO who said, and I’m copying and pasting this from the story: “give investors a chance to recalibrate their positions.”Report
I’m just baffled. ‘Recalibrate’ their positions in what manner? The only recalibration I can think of is _maybe_ Melvin Capital manages to somehow get other companies to take part of the hit for them, like a bulletproof vest distributing the impact, and they all just get their ribs broken.
Which..the only thing that accomplishes is making it less likely Melvin Capital doesn’t come up short of cash and somehow…uh, break reality, or whatever happens when people can’t actually cover their shorts.
I’m getting the impression that the entire financial industry is flailing wildly, desperate to somehow make this the fault of, and solvable by action again, the WSB people. _Surely_ something happened here that wasn’t, or shouldn’t have, been allowed! There had to be some bad behavior there.
It did. But what the financial market doesn’t want to understand is the bad behavior was by the people who decided to have some extremely naked and exposed shorts, way past any allowed level. And then a bunch of people noticed that and behaved in ways that seem entirely legal. To burn them to the ground, half out of profit and half out of spite.Report
See above… Robinhood is no longer offering GME (and other stocks) to buy… can only sell.
If the knife drops because of this… I can’t even.Report
comment in moderationReport
NASDAQ CEO: We need a complete and total shutdown of Gamestop transactions until we figure out what the hell is going on.Report
NASDAQ CEO: STOP THE COUNT!Report
HEDGE FUND MANAGERS: I hereby call for an audit of the machines tabulating these numbers due to rampant purchasing irregularities and that the results certified by the corrupt (S)EC be rejected.Report
Mortimer Duke: TURN THOSE MACHINES BACK ON!Report
Par for the course, really. Casinos kick out gamblers who make the house wince.Report
“NASDAQ CEO: We need a complete and total shutdown of Gamestop transactions until we figure out what the hell is going on”
That was lich rally the unwritten (& maybe written?) rule stock exchange operators had with their stakeholders & the SEC from 1934 until I guess sometime in the past few years. Historically, trading would have been halted last week on swings in price and volume of that magnitude.Report
I did Not See *THIS* coming:
I haven’t seen any evidence of the hate speech on the Discord. (Not saying that it wasn’t there, but no screencaps of purported conversations there have yet surfaced.)
The subreddit has gone private.Report
I read an interview with an “analyst” – which I guess means “someone with a megaphone on the TV” – who equated the WallStreetBets community as cult-like, dangerous, and growing daily. The Fear was tangible.Report
Subreddit is (currently) back.
There is a thread devoted to the subreddit having gone private on r/wallstreetbetsnew.Report
The more I think about this, it doesn’t feel like of plucky redittors taking on the evil Hedge Funds. It feels like a story where all actors can be bad and the Hedge Funds might have a point. Redditors feel like they are acting with for the lulz nihilism and that tends to cause more harm than good in the long run. The lesson Hedge Funds will learn is “okay, we will be more secretive going forward.” But everyone wants a simple narrative of good guys v. bad guys, Davids v. Goliaths, so that is the narrative we are getting.Report
Which means they completely miss the lesson of, “Don’t make a bet you can’t cover.”Report
I’m perplexed by any take that doesn’t include letting them die by the sword they live by.Report
No it means that they well still short things and make profits but they will not give up the hand as easily. Redditors are not a bunch of plucky good guys here sticking it to the man. I don’t see this being a happy lesson for anyone in the long term. This can be a story where everyone is acting really poorly and with malicious intent.Report
And this is bad why…?Report
See? Saul’s getting on board.
We’ll know that they’re racists and misogynists by Friday night. (Working with Russia?)Report
“These Redditors are just awful people. Disgusting. They’re worse than … hedge fund managers.”Report
In reality, Reddit is a cesspit of ignorant, entitled leftists.
Saul would love it.Report
I don’t have a strong opinion, but am generally skeptical of this sort of uncontrolled power.
In this particular instance the guys getting hurt probably deserve it.
But having a national economy where the financial security of hundreds of millions of people is subject to the whims of chance just seems…suboptimal.Report
Redittors are eventually going to hurt themselves.Report
I … am generally skeptical of this sort of uncontrolled power.
Wait. Am I understanding this right? You, Chip “New Dealer” Daniels, are skeptical of the power of individuals to act in concert to achieve a desired end?
I heard that the average contributor to this grassroots movement to bankrupt the hedgefunds was $27 dollahs.Report
Uncontrolled power.
There isn’t any leader, or platform, or ideology, or elected board.
This isn’t much different than Occupy or BLM or CHOP, which I also criticized for being uncontrolled uses of power.
I know we on the left have a soft spot for romantic visions of Liberty Leading The People in a spontaneous uprising, but in truth, without strong effective leadership and control, these things end badly.Report
Lefties are Burkeans now.Report
The judges would also accept “Trotskyites”, “Mencheviks” or “Counterrevolutionary Claque of Running Dogs of Imperialism”Report
Or “Hedge Fund Defenders”, apparently.Report
Chip is right in that this is something of a mob. It’s not a lynching, but more of a torches and pitchfork action against a privileged elite.
And all of this could have easily been avoided if the SEC, or the exchanges, had stepped in when Melvin shorted more stock than was on the market; rather than waiting until the mob was at the gate to start talking about how wrong the mob is.Report
PS. Have you ever read Saul Alinsky’s Rules For Radicals?
In it, he puts forward an idea of the working class people gaining proxy access on corporate boards and using their power for reforms.
Here is a blog post about it in 2010:
https://www.professorbainbridge.com/professorbainbridgecom/2010/08/proxy-rules-for-radicals.html
Not too dissimilar to this, except done in a controlled way.Report
I have not read rules for radicals but have seen that proposed before during the 1990s. The redittors are not what Saul Alinsky had in mind I imagine. It is also highly doubtful that they are causing all the problems. There are probably rival Wall Street firms coming in for the kill by going long.Report
I think the only people who actually read Alinsky are the rightwingers who freak out about his work.
Like the Professor Bainbridge above, who in 2010 soberly warned that soon wooly headed socialists would be running wild in the corporate boardrooms and dogs and cats would be living together.Report
Good news! The SEC is getting involved!
Report
Rousing the rabble to revolution, from a different streetcorner than the Redditors:
Pension funds demand BlackRock disclose its political activity in the wake of U.S. Capitol riots
Public pension funds overseeing more than $1 trillion are piling pressure on BlackRock, the world’s largest asset manager, to ramp up disclosure of its political activities in the wake of the Jan. 6 assault on the U.S. Capitol.
In a Monday letter to BlackRock CEO Larry Fink, 24 officials from retirement funds accuse the Wall Street giant of failing to “demonstrate leadership in its own practices or in its role as a top shareholder.”
And they are asking whether the firm intends to swear off contributions to the 147 congressional Republicans who opposed certifying President Biden’s election. The officials also want BlackRock to detail all of its political spending and throw its weight behind shareholder proposals to force similar transparency from companies in which it invests.
The pension funds’ missive — coordinated by the Service Employees International Union, the nation’s second-largest union, and Majority Action, a nonprofit that advocates on corporate governance issues — represents the leading edge of a new push to force changes in the political activity of Wall Street investment titans.Report
I think it’s great the public is pressuring firms like BlackRock to divest from insurrectionists and the GOP in general. The problem is that Democrats will eagerly accept all that cash and write or preserve legislation favorable to their interests. I guess one dark knight hope in this scenario is that the GOP blocks those moves because their pissed-off that Wallstreeters threw ’em in the ditch.Report
I’m a dumb dumb on this stuff but for GameStop to be currently trading at these large numbers, that means folks are buying it at these large numbers. Who is buying it? Even if you know for sure you can sell it to the folks who shorted it, you still need to have cash to lay out to buy it. Is that a buttload of Reddit-folks each buying a handful of shares? Or is this just one group of big players riding the wave to pick off another big player in a bad position?Report
FOMO means, apparently, “Fear Of Missing Out”.
I’m guessing that there are a bunch of people who bought one silly share and are making the most noise while there are a handful of Real Investment Houses out there who never would have thought about Melvin shorting Gamestop until they heard the noise from the silly people. They looked at the shorts, they looked at the stock price, did some quick math in their heads and they started buying round lots by the score.
Thus boosting the noisy, silly people. Thus creating more commotion. Thus grabbing the attention of more Real Investment Houses.
The ride ends Friday, I guess. That’s when the shares *MUST* be bought for whatever they happen to be selling for.
And then, come Monday, there’s going to be a bloodbath.
HEY I KNOW WE SHOULD SHORT GAMESTOPReport
Wouldn’t that point to the Real Investment Houses being the primary… source (I’m avoiding saying culprit or bad guy since it seems unclear on who exactly did what wrong)… of all this? Like, could the Reddit folks alone have driven the stock up 9 gajillion percent? If not… if the majority of what’s happening is due to Real Investment Houses, then it seems like all the hubbub about Reddit is just a smoke screen. The Reddit Folks said, “Hey, Melvin has no clothes on!” and Real Investment Houses figured, “Well, hell, we can swoop in and steal Melvin’s castle while he’s out walking around naked,” and the media is all, “YOWZA! Reddit is storming Melvin’s castle!”
And if RIH swooping in when Melvin’s pants are down is just how markets work and this particular case just got really out of hand, than it would make sense that the media surrounding it wants to make it all about Reddit and not about how screwy our financial system is.
But, like I said, I’m a dumbdumb on this so maybe I have it all wrong.Report
If the Real Investment Houses are the primary (whatevers) here, you should probably notice the whole thing about how the Reddit guys are being smeared as being bad people.
Maybe even ask if the people doing the smearing would somehow benefit from you seeing Reddit as the bad guys instead of the Real Investment Houses or, god forbid, the Hedge Funds that shorted 117% of the extant stock in the first place.Report
wallstreetbets apparently describes itself as “4chan with a Bloomberg terminal.” Why is this admirable? 4chan is filled with nihilistic miscreants who want to tear down the very structures of civilization and society that make the existence of something like 4chan possible. They are not down and out and on the fringes of society. Many of them are middle class and comfortable but they decided that it is kind of funny to be Heath Ledger’s version of the Joker in their downtime. They think they are being revolutionaries but end up just eating away at their own safety and security.Report
Do you think that maybe we should have given Mitt Romney a fairer shake back in 2012?
At least when it came to his ties to Bain Capital?Report
No. Nice try.Report
Saul, if I were to try to find a bad guy in all of this… If I were searching for a “miscreant”, I would begin with the Hedge Fund that shorted more stock than existed. I would begin with the Hedge Fund that put itself in a position where it had to cover this particular price.
Out of curiosity, have you ever talked to an investment professional for any of your investments? Did they give you the speech about the Tulip Panic of the 1600s and explain that some people lose money in the stock market too and the best way to make money on the market is to buy a fund that they’re overseeing, put money into it every month but otherwise don’t move? Have a long timeline?
Do you see this as an unfair standard to be held to?Report
Jaybird, it is possible to have a story without good guys. This is one of those times.Report
Out of curiosity, have you ever talked to an investment professional for any of your investments? Did they give you the speech about the Tulip Panic of the 1600s and explain that some people lose money in the stock market too and the best way to make money on the market is to buy a fund that they’re overseeing, put money into it every month but otherwise don’t move? Have a long timeline?
Do you see this as an unfair standard to be held to?Report
Yep, the Hedge fund guys are bad for making a bet they can’t cover, the reddit guys are bad for pulling down the hedge fund guys pants, and people like you are bad for doing all this hand wringing that will ultimately provide cover for a privileged system that allows the ‘right’ people to play fast and loose with billions of dollars, but condemns the masses from doing the same.
No good guys anywhere…Report
“4chan with a Bloomberg terminal”
That’s how they describe themselves. Is that how others describe them? I’m not very familiar with Reddit or 4chan or whatever, but I believe users have a pretty high degree of anonymity. Would it shock you to learn some of the major players behind WSB are folks well outside what you describe and are simply using (manipulating?) the forum to their own ends?
Like, again, I’m not well versed in really any of this, but if I was deeply-in-the-know and wanted to leverage my knowledge without anyone finding out, I could see an anonymous message board where I could whip up some yahoos while pulling a bunch of self-advantageous strings behind the scenes to be a pretty tempting endeavor. And, if I did so, I sure as hell would pretend to just be a yahoo myself.Report
Let’s say it’s hedge fund on hedge fund violence. Unless this is constrained by some sort of secret Wall Street omerta then its actually worse (and potentially far reaching) than Reddit getting lucky.
The thing that protects Melvin Capital while *publicly* going massively short on GME is the fact that Rival-x is short on something else so the network can send a message if Rival-x starts squeezing Melvin by nudging their hedges.
If the Rival houses are going to ‘consolidate’ gangland style… then *that’s* the real story.
We don’t know.
But on a much more prosaic level, we do know that some large ‘outside’ players were part of the movement since 2019… it’s not 100% reddit, it has some ‘institutional’ backing, but that backing was fairly above-board that the fundamentals were excessively shorted and gambled by investing and taking a long position to acquire board seats… that’s when Reddit really started to see the gamble pay-off – when the price moved from $4 to $10 to $20 – but that took a year.Report
Why are you assuming anything is admirable? If Al-Qaida was getting into skirmishes with ISIS, would be rooting for one side or the other? Would you be calling AQ admirable because ISIS was the bigger threat?
No, you’d worry about collateral damage to non-combatants.
Now stop being pissy because you think the WSB group might have some politically undesirable people in it.Report
Report
NPR is now on board:
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Interesting development. Just for sh–s and giggles last evening my wife and I attempted to purchase $50 in AMC shares and $50 in Blackberry shares using Robinhood. We were just notified that our transactions were canceled and the app is no longer letting users buy the reddit promoted stock.Report
The rules have changed.
I wonder if the shorts will still be honored anyway.Report
Yes… fascinating.
Deplatforming stocks.
[It’s not a thing]
[It’s totally legal]
[It’s more moral]
[It’s what Free Market really means]Report
Not particularly remarkable. During one of the tech bubbles, my online broker had a whole list of stocks for which they would not accept orders. The explanation given then was that due to a shorting frenzy and software rules-driven trades, they couldn’t guarantee that orders would be fulfilled — the big boys had hoovered up all available shares and were using them for internal trades only.Report
It’s one thing to do this when only people In The Know are playing this particular game.
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Sure… this was the “give investors a chance to recalibrate their positions” without ‘outsider’ interference for that recalibration.
Laying bare the fact that Markets are 100% manufactured and man-made is fine by me… but don’t expect Markets (TM) to survive this encounter with reality.Report
NASDAQ CEO said “shut it down!” and Robinhood jumped.
It’s hard to not see this as a coordinated attempt by institutional players to alter the market price of a publicly traded stock.Report
Yeah… my initial take was something closer to Michaels where this was a broad Market halt… but as Vikram is asking on Twitter… have we ever really seen a targeted group forced to sell and not buy – while the rest of the market (esp institutional players) can buy/sell as needed?
Basically by forcing Sell as the only option, it is signaling (more than signaling) it is *ending* the play and forcing the sell-off.
But, good news, we’re informed by Biden’s press Secretary that Janet Yellen is a woman.Report
Man, get out a note pad. The arguments justifying Robinhood’s actions here will be dizzyingly complex and disjointed.Report
So far they seem to rely on “you’re bad”.Report
Hey, remember last year?
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It will be interesting to see what new and exciting strains of populism arise from the official response to this.Report
Having spoken to The Powers That Be, they are floating a name for it: Incel National Socialism.
They want to know if you are on the side of the Nazi Virgins (who are still calling themselves “Nice Guys”) or the good people.Report
To be fair, they are not senators anymore. The political market works!Report
Pelosi bought Tesla a couple hours before Biden announced all future Gov Vehicles would be Electric.
But you can’t buy Gamestop.Report
Robinhood suspends trades in Reddit YOLO stocks. Does anyone remember the story from June about the kid who committed suicide because he thought he was 730k in the red? What if this ends up similarly but on a mass scale? Will it be taking on the man then?Report
When “The Man” manipulates the game and forces everyone to catch the falling knife?
Just get ready for the next iteration.Report
And now we are asked to think about the children.
Next up: Will crashing Hedge Funds harm BIPOC minorities more than it will harm Cis-Het White Males?
BLACK LIVES MATTER!Report
You are a bad faith troll.Report
That will stop working soon, Saul.
(It may have stopped working already.)
Then what?Report
One you are done with Gamestop would you care to invest in some Tulips or enterprises in the South Seas?
There can be a story where there are no good guys. This is not that hard to imagine. Not everything can be turned into a story of a little guy taking on a big guy and winning. Life is more complicated than that whether we want it to be or not. I am not saying that Hedge Funds are good. I’m stating that for the lulz nihilistic investing probably is going to have unforeseen consequences and those consequences are going to hurt people that are not Wall Street titans as well.
The truth is that Gamestop as a business model still has fundamental flaws and the price cannot stay this high forever. But lots of people want this to be like a Hollywood movie where people cheer on some little guy who hoodwinked some cartoon villain that all ability to fully analyze the situation goes out the window.Report
Saul, I have no Gamestop stock.
The closest that I am to this is that my Boss, who I mentioned already, bought *ONE* share at $90.
I’m stating that for the lulz nihilistic investing probably is going to have unforeseen consequences and those consequences are going to hurt people that are not Wall Street titans as well.
Yes, I agree.
But the Lulz nihilistic investors are capitalizing on the vulture Hedge Funds who were engaging in some Romneyesque Bullshit.
They got called on it.
Now they find themselves on the wrong end of Tulip futures and definitely on the wrong end of the enterprises in the South Seas.
Who did this?
Not me.
I am just watching with interest and noticing that the people who are buying the stock that the Hedge Funds shorted are being called names and having their motives questioned.
They bought stock. They’re participating in a short squeeze of the Hedge Funds.
If anybody needed the Tulip speech, it wasn’t me. It was the guys who shorted more than 100% of Gamestop’s stock.
I’m just the guy who says that we should probably follow the rules that existed last week.
If you think we should change the rules, I’d like you to make your case.
You know, instead of impugning the motives of the people who think that we shouldn’t.Report
You are a typical wishy-washy leftists who just can’t stand when the ‘wrong’ people actually take privilege to task.Report
I know right?
I remember when a bunch of the “wrong” people killed 600 or so Wall Street traders in the North Tower on 9-11, and sure enough, with typical liberal hypocrisy, the Democrat party denounced it.
First they denounce Wall Street, then denounce those who attack it. Make up your minds, libtards!Report
Attacking it?
They’re buying stocks.Report
*Blows whistle!*
False Equivalence! Defense! 5 yard penalty, first down!Report
Martin Sheen voice:
Sh!t, calling a False Equivalence around here is like giving our speeding tickets at the Indy 500.Report
OK, that made me laugh, you can have the 5 yards back, but it’s still first down.Report
“Terminate Gamestop transactions with … extreme prejudice.”Report
There are competing narratives. If you are looking at things and seeing how things aren’t quite lining up and are, instead, feeling like you are being lied to, here is an alternative narrative that might line up for you instead… read the whole thread.
While you can, of course. I imagine he will be banned for “hate speech” soon too.
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From AOC:
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I know a lot of people don’t like her – and a lot of people at this *site* don’t like her – but she (along with Katie Porter) is probably the best person the Dems could hope to have on that committee right now investigating this stuff. She could (help) pierce the Wallstreet wall institutional Dems have built their careers on maintaining. (Looking at you Chuck Schumer… and whole bunch of others….)Report
I think that some of her stuff is vapid and some of her stuff just won’t work.
I think the Green New Deal stuff was undercooked as hell, for example.
But she’s got as much Charisma as DJT.
I imagine that the institutional players will try to consolidate her district with someone more willing to play ball come the redistricting.
I don’t know that it’ll work…Report
I cut her some slack on the GND rollout. She outsourced that plan to her seriously deranged now-ex chief of staff, who was (did I mention?) seriously deranged. She doesn’t get a complete exoneration because she hired him, and because she didn’t rein his seriously deranged ass in before going live with it.
All that said, the stink of the GND stays with her, as it rightly should.Report
My issue with AOC is that I think shes kind of naive and suffers from the skewed perspective of an ultra safe district. This prevents her from success in those areas where it would be really good for her to have some. But she is definitely not a phony and she occasionally does get some hard to hear truths into the conversation. Respect where it is due.Report
You gotta take the good with the bad, in my opinion. Personally I’d rather have 100 AOC’s in the house fighting for their priorities against the other 335 than what he have right now.Report
Waiting for the pivot from Comms to Policy – as they say these days.Report
+1Report
I don’t agree with AOC on much when it comes to policy, and I don’t like the way she frames disagreement as a moral failing, but she does at least have a set of principles that guide her views, unlike most establishment politicians.Report
Yeah. I don’t agree with her principles… but she has them.
That’s someone that you can have a real conversation with.Report
Uh-oh:
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Welp, there goes that.
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From one pov this is unfortunate. Ted just can’t escape the legacy of his father and all that pro-murdering behavior. It’s a big-time anchor on his emotional growth.Report
#timetomoveonfromKennedyassassinationReport
Note: This means we have to regulate *SPEECH*.
Not Hedge Funds… *SPEECH*.
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The weird part of this is that the solution is easy: don’t make risky bets on stock prices. You don’t even need any new laws to accomplish this goal, just a change in hedgefund investing behavior. BUT … a lot of people *really like* posting a 30%/yr returns, which is what Melvin had averaged over the last six years apparently. It was +47% in 2015, +41% in ’17. Thatsa lotta mozzarella.Report
Its all tracible back to the risible idea that fiduciary responsibility means always generating ever increasing profits.Report
Hrm. Apparently cheating didn’t work.
Tomorrow is going to be an interesting day.Report
The Russians have arrivedReport
I won’t be surprised if China is working this as well.Report
Wow… sell-off from $476 down to $126 (plan is working) … rebounds to $300 … now plateauing … what will Friday bring?
This is just will-to-power at this point.
[bad things will come of this, but still]Report
Still hovering at $250 as we approach closing bell… weird spike to almost $500 at 2:00… this is one manipulated beast.Report
NASDAQ CEO: Investors have recalibrated, decided they want the squeeze.Report
Some of you have not read your dad’s copy of Louis Engel’s classic “How To Buy Stocks” and it showsReport
This is why we need gifs here.Report
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Play stupid games, win stupid prizes. Everyone knows shorting is risky – many are learning that the hard way.Report
This has been a pretty interesting discussion. A few thoughts:
– Even I am surprised at how many people are trying to cram this square situation into the round hole of the current culture war. Too many people seem to be mostly interested in which side best supports their priors and viewing the situation through a binary lens a good and bad side. I’m seeing very few arguments based on first principles or objective criteria. Except, ironically, AOC and a few others. Instead, it’s quickly becoming a lot of self-righteous hand-waving about bad people and bad organizations and supporting pretty much anything that hurts the bad people or bad organizations.
Personally, I think everyone should stay out of it and let this play out. If speculators want to play chicken (and these are speculators, not investors), why should anyone stop them. The hedge funds and Redditors are all adults who have agency and ought to understand the game they are playing. Big daddy paternalistic government, regulators, blue-check elites, tech companies, etc. should not step in and save any of them from their own mistakes, either with bailouts or preventing them from trading or de-platforming.
The only justified reason for regulators to step in and stop this is if there is a systemic market risk, which there isn’t.Report
It’d be nice if the reporting was accurate. While there are redditors YOLOing their way through this, and meming, they don’t represent nearly enough money to squeeze the short traders.
They never did. Whether these guys noticed first, or around the same time, as real money is immaterial — for all the short traders are getting squeezed, it’s institutional money doing the squeezing.
Money that’s bought in under 20 and is probably already out, leaving only the YOLOers to be the dumb suckers holding the bag alongside the short-sellers. There’s a LOT of “every day joes sticking it to the Bad Hedge Fund Man” who bought in at 100+ and are going to be starting at 10 dollar shares.
Bluntly put, any major investor who realized the position MC had put themselves into and that others had also noticed (ie, the market was moving to take advantage of someone who had shoved themsevlves into the Bad Idea Box and take all their money — and I mean ALL THEIR MONEY) was jumping onto Gamestop stock before it hit 40 a share.
Which is, you know, why shorting more shares than the market actually has is supposed to be illegal. Sure you make a ton of money if no one notices, but if someone does — this happens.Report
Yes, I’m the furthest thing from any kind of financial expert. I did some “play trading” about a decade ago for fun, so know the basics, but even at my level of ignorance, it is quite obvious that a lot of the reporting is just bad.Report
The irony of course will be that everyone will clutch pearls over what the WSB/day traders are doing, and everyone will ignore the fact that the SMITR (smartest people in the room) did a big bad thing.Report
Well, bluntly, the big hedge fund that stuck itself in the Bad Idea Box should go bankrupt. And by all accounts, they absolutely are — and taking a few others with them.
I feel bad for the “few others” — because shorting GameStop was actually the smart, proper play. But MC shorted it so much that, as noted, they can’t meet their obligations under the short without actually rebuying and reselling the same shares some. Which is why they could be squeezed.
If they hadn’t, quite illegally I believe, shorted more shares than they could actually get — the squeeze couldn’t have happened and the market would have performed as normal, which was to the short-sellers benefit because Gamestop is in really, really bad shape.
This being, of course, why what they did is illegal. And their move will not just bankrupt them, but some otherwise blameless folks.
At the moment, any smart investor should already have gotten out. We’re in dumb money now, for the most party, and it’s just a matter of who is holding the bag when reality reasserts once the illegal massive short is resolved.
Which is unlikely to be institutional investors, but is ironically likely to be the very people complaining right now that they’re only being allowed to SELL their Gamestop stock.
Which, FYI, I don’t agree with — while the irony is the ban on purchases is likely to save a bunch of the complainers money as the bottom drops out, as long as they’re not trading on money they don’t have, it’s their right to spend it as they please.
And it’s not like this particular kurfluffle is anything like 2007, wherein all the mess had infiltrated the banking systems and the triple-A bonds.
I do feel for the guys who had a perfectly sensible short out on Gamestop and didn’t put in a stop-loss order, but that’s why those exist in the first place — to limit the loss on shorts, and because the loss on shorts is not bounded (the stock price can’t drop below zero for long trades, but it can — as noted — rise as high as it wants on shorts) they absolutely should have “Bail me the hell out” orders for any short trade.
I betcha money that besides MC going bust, the Yoloing redditors are likely to be the second biggest losers when this shakes down, as the Gamestop shares go bust when the short isn’t holding them up anymore.Report
Completely agree.
My concerns are:
A) What kind of BS TPTB will try to put in place to stop the mob from punishing bad actors like this (rather than just letting this all happen and telling everyone not involved to not be that dumb)?
B) What kind of illegal BS the financial elite will do to stop the bleeding, and will any of them be successfully sued or prosecuted for it?
I fear that TPTB will try to bring forth the heavy hand, and the elite who cross the line will never see the inside of a courtroom.Report
You presuppose anyone is stepping in for justifiable or justified reasons.Report
I’m not presupposing that at all. Since I don’t see much rational or objective justification for people with authority and power to step in, I’m actually skeptical about their motivations for doing so.Report
Predictably, getting lambasted in the replies.Report
The term “market volatility” is being used here like the term “labor flexibility” was a decade ago. Sounds neutral, but the implied arrow points in one very specific direction.Report
No joke. If you read the statement linked, they use an awful lot of words to say if you use our app, you’re fished.Report
Well, the Winklevoss has spoken [but note, not invested] : #Holdtheline
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I have a comment stuck. Free me mods!Report
Holy shit: If this is true…
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Well if the Winklevoss tweet above is factual, Robinhood is protecting its actual customer by trying to recoup funds from its alleged customers. I smell class actions coming down the pipe.Report
Forced sales are legal if a person is highly leveraged and the broker requires maintenance of a certain balance. Probably not the case here though.Report
My bet is they are doing that to anyone who bought on margin and will justify that way.Report
Scraping the bottom of the barrel when it comes to spokespeople.
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Jesus, what a snowflake. And I say that as someone who (1) has no skin in this game (2) thinks the short sellers are getting (rightfully) taken to the cleaners by institutional money, not Redditors and (3) thinks a lot of those redditors and late comers are going to end up losing a lot of money on this.
I’m guessing quite a few big name companies are going to use MC’s money to showcase good returns this quarter though.Report
I have zero sympathy for the uber rich seeing their own methods used against them. Its hilarious on so many levels.Report
Unless there’s another clip… I watched the clip and he doesn’t say what Offenhartz quotes.
I mean, I was hoping he did… that’s why I watched the clip… instead, at the 3:30 mark he gives a pretty self-serving and obviously silly take on the 2008 bailout, but basically just says that short selling is risky and obviously the shorts are very smart people who are going to be correct in the long run. Honestly, he seems fairly oblivious to anything that’s happening.
But, as I say – unless there’s another clip – he’s not angry nor does he say the silly things above.
Link to clipReport
This is from CopingMAGA, a twitter devoted to mocking people who were Trump Supporters in the days following the election. (That’s why it has Pepe in the picture… MAGAPepe is hooked up to a Copium dispenser. It is *NOT* a pro-Pepe, Pro-MAGA picture.) It has the clip of the soundbite in question:
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Thanks… looks like he said the words… now I feel compelled to find the full un-edited clip to get the context.Report
If you’d like to feel confused for a second, here’s one of him crying:
Edit: Nevermind. It was an old clip.Report
Heh, Erick Erickson is turning into the No-Malarkey of the Right… he found the context… it seems there may have been some, er, context shifting. I mean, he still comes of as a ‘bad spokesman’ for the oligarchy… but not really specific to the Gamestop stuff. Alas.
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Good catch!
(I imagine the context is *SLIGHTLY* better. But, goodness, he’s in the middle of an overton window for an audience that does not include me.)Report
Seriously, what the hell???
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RobinHood has stopped allowing users to buy GME. Or AMC, or many others. A stock that _more than half their users own_.
They have given no justification for this, although a lot of people are pointing out that the company that owns RobinHood is actually heavily invested in one of the hedge funds that is about to crash.
It is, at this point, almost impossible for retail stock traders to buy GME. Almost no online stock-trading companies are allowing it to be purchased.
There is, again, no apparent legal justification for this. There’s absolutely no SEC restrictions on trade, this is just a bunch of brokerage firms banding together to try to save their own skin and the skin of their friends.
It’s not working.
WSB is _still_ holding firm and not selling. It’s not _quite_ as high as it was, but it’s still more than high enough to bankrupt hedge funds.Report
Because they think they can. Because we bailed them out in 2008 and then enacted precisely no reforms. Because they haven’t been paying attention to how badly they have pissed off so many Americans.
They shouldn’t be surprised. Neither should we.Report
It’s worse than that. They’ve started selling shares on behalf of their own customers:
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Yeah, it’s _suspected_ those are purchases on margin, aka, not fully funded. If you don’t fully fund them by the time the margin is called, (Aka, when you have to pay off the loan.) the brokerage will sell them _and_ whatever random stock you have in it to cover any losses.
They’re supposed to do this, basically, buying on margin puts your other stocks up as collateral, and they’re actually supposed to sell what you bought on margin early enough that they don’t have to dip too much into your account.
But _changing_ the margin call date would imply that the stock has dropped enough that the RobinHood is not sure you are _ever_ going to fund the trade, which a) is a stupid concept for people who have other stocks, because those would just be sold, and b) really only supposed to happen when the stock drops a _lot_ a lot, and c) is supposed to allow some warning.
The margin call will happen at a certain specific time, and the brokerage can move it forward if they are very worried for very specific reasons, but you’re supposed to _know_ all this, and have a chance to pay it off. RH is…not doing that. They just started acting like people missed the margin call and sold the stock.
This is, quite likely, illegal under current trading law, and in violation of various contracts they have with their customers.
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They have probably _not_ started selling non-margin stock. We hope? That would literally be grand theft!
I mean, at this point, they might actually be that panicked. A bunch of them were laughing at this as recently as last week, and STILL BUYING SHORTS!
The Financial Industry are possibly the stupidest ‘Very Smart’ people that ever existed. What they are basically good at is rigging rules and moving money around, and they have purposely built a system that no one can understand so they can just make things up about it and have an explanation for slowly stealing everyone money.
Unfortunately for them, ‘that no one understand this thing’ includes _them_. And it turns out a bunch of degenerate redditors sometimes will notice glitches in it and the stolen money will go to the wrong people.Report
Oh, and RobinHood has started to call margins apparently in violation of their agreements. As in, if you bought GME on margin before they blocked it, and did not fully fund the transfer, they are canceling it right now, instead of when their agreement says that margins should actually be called. (Normally, people with a lot of other stock can delay payment, because if they fail to pay, that stock plus their other stock can be sold to cover it.)
Margins on RH are apparently supposed to be called by the end of business Friday, they should really only be called earlier if the other stocks or the purchased stock plummet, and even then it should be ‘You have to pay for this stock today’, not just immediately selling the stock…a stock that people now cannot buy again.
Lawsuits were immediately filed.
This entire is honestly almost inconceivable, and the people who thought this was nothing, need to notice the entire financial industry is trying to rig the scales at this point to stop this. Half the brokerages won’t allow purchasing of the GME, citing ‘volatility’…but for some reason still allow sales. Hmmm. Weird.
And WSB is still refusing to sell.
Tomorrow morning, the options happen, and a bunch of hedge firms have to buy every single GameStop share in existence, at whatever the hell price they’re listed for, and give them away. And then have to wrap around and buy somewhere around 20% of them _again_ (It started at like 148% but they have apparently managed to cover _some_ of them.) and give them away.
Not only is the stock so high they can’t cover that, but that amount of volume will skyrocket the market while it’s happening.
They won’t be able to buy enough, they will go bankrupt, and the brokerages that stupidly let them get away with so many naked shorts will then have to cover the rest.
Or, alternately, the brokerages will extend them _huge_ amount of margin, let them essentially buy all this stock with non-existent money that they have to pay back. And possibly can’t ever pay back. A rather large contrast to what the brokerages are doing to retail traders.
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BTW, Melvin Capital has once, again, asserted it has closed out all its shorts in GME:
https://twitter.com/FinancialNews/status/1354859571303612416
They super-duper promise!
The fact the market didn’t react to the tens of millions of share that woud have been dumped back into it means nothing, promise. All those people still holding their stock need to realize it’s about to plummet, and they should sell now, before Friday! Melvin Capital would really, really like you to start selling now, please?
BTW: Why isn’t lying about altering your market position like this, itself, market manipulation? That sort of lies really seems much more actionable as some sort of fraud vs. the people who have very clearly said what they are doing and are entirely factually correct about everything.Report
After 2008 they expect to be bailed out by the federal government. Thus they do not actually care about the rules or the principals or ideals.
WSB has laid them bare and naked for all to see. And sadly they will not be mocked or shunned by the people like the king was when we saw him naked.Report
If people are buying on margin, I think Robinhood has a right to force sales/halt sales. But the Citadel connection is not pretty.Report
So a blog I check posted a letter from a Robinhood employee who stated that the founder received calls from Sequoia Capital and the White House pressuring them to close trading on GME.
Is it true? No idea. Is it possible? Yes. Do I believe it? Not sure. Do I believe that shit like this takes place? Damn right I do.Report
https://nypost.com/2021/01/28/robinhood-hit-with-lawsuit-after-restricting-gamestop-stock/Report
A complaint is not indicative of success on the merits.Report
Oh, and pigs are flying:
https://twitter.com/tedcruz/status/1354833603943931905Report
Not really related but when did “Blue Check(mark) Elites” become a slur?Report
Since the inception of the blue check mark.Report
Doesn’t that just mean that Twitter has verified the person as who they really are? Or is it more than that? And why are we now supposed to look askew at folks who have them?Report
Yes. You know that you are talking to the *REAL* Ashton Kutcher and the @ashtonkutcherfacts account that has his picture is *NOT* really him.
This mostly gets used for the following people:
1. Celebrities (Hollywood, sports, whatever)
2. Journalists (you want to know that the info is coming from Walter Kronkite and not @WalterFax, after all)
3. Politicians (you want to know that it’s @AOC and not @AOCisworsethanhitler despite having the same picture)
4. Businesses and Business Personalities (is this the *OFFICIAL* @DunkinDonuts account? is this *REALLY* @Lexus? Are you *REALLY* the @TedTalkGuyKazzy that I saw a youtube of? Are you *REALLY* the guy who wrote that Sci-Fi book that I enjoyed?)
If you, Kaz Zy, the guy who lives on the East Coast and teaches kids and spends Friday evenings at the Harmony Bowl but is otherwise not particularly notable but wanted to get a check…
How would you do it?
It’s a big club, but you ain’t in it.Report
What is the Harmony Bowl and how do you know when I go there?
More seriously, while the Blue Checkmark Club seems like one the vast majority of us will never be in, that alone (to me at least) doesn’t really justify what seems like conspiratorial whispering about its members. Maybe I’m misreading it, but where I’m seeing it mentioned is of the, “Well, of course THEY would say that… THEY have a Blue CheckMark!” But for a group so diverse that it counts among its members Ashton Kutcher, Ted Cruz, AOC, Walter Kronkite, and DunkinDonuts, I’m not sure I buy that there is any there there.Report
It’s shorthand for “The Élite” (please note the acute accent).Report
“why are now supposed to look at them askew”
Culture.Report
It’s been a couple of years, now.Report
This is a more balanced look at the whole affair: https://www.theatlantic.com/ideas/archive/2021/01/why-everybody-obsessed-gamestop/617857/
“But something tells me that we’re at the dawn of something stranger. For a week, takes have flown wildly around the internet that tried to capture this saga in a tweet. The investor and former Trump White House communications director Anthony Scaramucci compared what we’re seeing now to the “French Revolution of finance,” with an army of scrappy traders engaged in a moral uprising. Others worried that the GameStop bubble was turning into a collectivized Ponzi scheme, in which innocents were being lured into a ruse that would take all their money after the market corrected. Given that online trading has been restricted and the company’s stock is now in a free fall, both the Mooch and the Debbie Downers might be right. When the French Revolution ended, some of its most eager proponents lost more than an arm and a leg.”Report
“…. after the market corrected. Given that online trading has been restricted and the company’s stock is now in a free fall…”
3 points. 1, GME closed at $193. 2, it’s not in freefall but pretty stable over the last four hours of trading. And 3, the price didn’t drop due to “market corrections” but brute (illegal?) force.Report
Yes, stocks are in a ‘freefall’, in the sense they are…still at $260, an entire $10 less they were the moment the article was published. Where it has skyrocketed back up from hitting the opening low of $126, where Big Finance had managed to force it down at opening bell but it had climbed back to 3/4th of where it was yesterday.
Hey, Derek Thompson? Maybe don’t publish an article saying the stocks are in freefall when they have literally more than doubled since midnight? Because it make you sound insane.
What we’re seeing here is who, _exactly_, the people writing these articles listen to. Who is feeding them information. And it’s…the people who desperately want the price to go down.
And fun fact: The deadline of Friday is not mentioned in that article at all. It’s just…’a mysterious bubble’ that they seem unwilling to actually explain what is going on, which is literally explainable in one paragraph. Instead, they…talk about nesting-doll metaphors? Huh?Report
They don’t want to admit their bubble has been burst by guys and gals in gym shorts sitting on cheap couches. That redditors could engineer this has so shocked these folks they really don’t know how to deal.Report
Yeah, the after hours trading has it back up to $266.
Hmmm….Report
Or, perhaps, these are journalists who have investments that are at risk if (when) this crashes, and they are desperately trying to manipulate that risk.Report
Nah.
They just work for people who do.Report
Journalists aren’t rich enough to invest in hedge funds.
Like Jaybird said…the owners of newspapers and magazine…they’re the ones rich enough.Report
The housing bubble of the mid-aughts kept on rising and rising until it did not and then it failed quite spectacularly and lots of people were hurt whether they participated in the mania/bubble or not.
I can’t believe that so many people are turning this whole thing into a simplistic David vs. Goliath narrative and finding ways to rationalize it into a narrative for AOC, the dirtbag left, techbro libertarians, and right-wing faux populists. Doesn’t it strike anyone else as insane that this story is becoming all things for all people? That is usually a sign something is not right, not a sign that something is right.Report
I can’t believe that so many people are turning this whole thing into a simplistic David vs. Goliath narrative and finding ways to rationalize it into a narrative for AOC, the dirtbag left, techbro libertarians, and right-wing faux populists. Doesn’t it strike anyone else as insane that this story is becoming all things for all people? That is usually a sign something is not right, not a sign that something is right.
What *I* am pissed off about is the blatant market manipulation and the two sets of rules for two sets of people.Report
Yeah, I agree. The double-standard is the obvious problem.
This is a pretty good article from a former trader-turned-socialist (possible paywall):
https://nymag.com/intelligencer/2021/01/robinhood-ban-gamestop-share-price-explained.htmlReport
I would mind the double-standard less if it were explicitly acknowledged.
But this opened with “This is a more balanced look” and… you wanna see the opening of this “more balanced look”?
“Revenge plot”
OH NO! A REVENGE PLOT!!! WHAT DID THEY DO?!?!?!?
“They bought stock.”Report
“Doesn’t it strike anyone else as insane that this story is becoming all things for all people?”
Yes, this is a warning sign to me of an issue blowing up into a fountain of hot takes and bad framing.
Most people are seeing it as a sort of Trading Places thing where the stuffy old rich guys get fleeced by the charming young con men and sure, that’s hilarious.
And I wouldn’t complain about that either. But my inherent caution feels that somehow a lot of smaller fish are going to be eaten here.
But in this case, I would be happy to be proven wrong in the end.Report
Saul, you know how you read the Briggs newspaper funnies and ask “WHO IS THE TARGET AUDIENCE FOR THIS?!?” incredulously?
You should ask that question of everything you look at.
If you find yourself *NOT* asking that, you should notice. Maybe even say “Hey. I might be the target audience for this.”Report
Hilarious fact: If you have hold stock, brokerages can ask you if you want to allow people to borrow that stock to cover someone else’s shorts. The shorter can borrow your share and hand _it_ over to cover their shorts, and then pay _you_ back later with a share for that company, plus a specific amount of interest.
But, legally, you have to be able to refuse them the ability for brokers to do that. Because it’s your stock.
All the WSB people have contacted their brokers (It’s an option in RobinHood) and disabled that.
If they were in it for the money, that would be a mistake. Having hedge funds have to borrow their share to pay someone else off, and pay them interest, only to them have to _buy_ their share later, and pay for it there, too, would be a great way to make even more.
But they’re not there to make money. They’re there to burn the entire thing to the ground. All this obvious manipulation of the situation by the actual supposedly neutral people running the market, while _they_ are being accused of manipulation, has not helped their attitude.Report
So, how does a short work in actual practice. From what I can gather someone (an institutional investor, say) “borrows” shares to sell at T1, then must purchase actual shares at T2. Is that right? What entity buys (or covers, whatever) the ((non-existent) shares sold by the (short) seller at T1?Report
It’s not that they must purchase the shares at T2.
It’s that they must *RETURN* the shares at T2.
If they do not have the shares, they must then purchase the shares.
(Like, if they had bought a buncha shares two months ago, we wouldn’t be in this mess.)Report
Who brokers this deal? Who do hedge funds go to to “borrow” shares from on the promise they’ll deliver them at T2?Report
DavidTC is a lot more knowledgeable on this stuff than I am but I have had to go to approximately one bajillion sources to figure this stuff out.
Read DavidTC’s post below (which helped me) and also check out this thread that gets into the different stages of the deal brokering (as well as having backstory):
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David’s explanation is good but if you are also simple like me and needed it broken down even further I found this helpful:
https://www.investopedia.com/ask/answers/how-does-one-make-money-short-selling/Report
It’s more an ‘IOU 1 Stock’. So, imagine it’s a few months ago, and I think GameStop will be below $10 on January 29th. (For a completely random example.)
So I sell you a _future_ share of GameStock for $10, and I have to deliver it January 29th. (I’ve actually sold you the right to get that share from me, and you can resell that right if you want.)
That’s going short. I believe the stock will decrease in value, ergo, I am presaling it at a low price so I get the money now.
You presumable believe it will be above $10 at that time. So you went long.
Now, you ask, why would you do this instead of just buying the stock and holding it, which is also going long? I mean, if you think stock is going to go up, you should just buy it, right? Not a promise that someone will give it to you?
Well, maybe it’s above $10 now. Let’s say it’s $20,and you think it’s going to be between $10-$30 in January? You don’t want to spent $20 and risk money, but you can spend $10 and risk less and that works out well. So you buy the other side of a short instead of the stock itself.
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Now, there is an interesting problem in how this works. I probably don’t already own the stock to give you…why would I? That would be insane, the entire point is that I will be able to buy the stock in January, when I predict it’s under $10, and give it to you. (And, honestly, because of interest and how the market works, I’m probably okay if the stock is even a little below $10.)
If the stock, OTOH, happens to be $289 dollars at the day I have to give it you, I just lost $279 dollars. There a few are ways around that if it’s some sort of temp market thing, for example, I can borrow the share from someone else and give it to you, and then buy another share to pay that other person back, plus interest. (Assuming the owners haven’t decided to, uh, not let me do that.) I can also offer you some money to extend the short.
But I really am out that money. This is why short sales are asserted to have ‘infinite’ liability. It’s not literally infinite, because obviously no stock price can literally be infinite, but it could be all the money in the world.
And that’s why retail traders aren’t allowed to do them, and professional traders are usually required to have assets that could, hypothetically, cover them. They also generally aren’t supposed to short more than a certain amount of a company.
And not, for a random example, 148% of the company, like I did in this example. Which means I need to purchase 148% of all stocks to give to people I sold shorts to. Which isn’t as impossible as it sounds…assuming some of those people then turn around and sell the stock when I hand it to them.
Why would anyone due that? Well, they could do it as part of a scheme to indicate lack of confidence in the share price, and go on TV talking them up, and expect to make a bunch when the stock craters, and then vulture capitalists can buy all the stock of the poorly performing company and dismantle it for parts.
For example.Report
Thanks DavidReport
Oh, and GME is now up to $310.Report
$348 now. Slightly above yesterdays closing price.
Saul, are you PAYING ATTENTION TO THIS!??!Report
One important point is that it is the BROKER and *not* the Trader who gains the benefit of the loaned short… that’s also why the Redditors are telling folks to set their shares to No-Loan. The individual trader never sees any of the Lender benefits… it’s all BROKER money.
From Investopedia
“In determining who benefits from lending shares in a short sale, we first need to clarify who is doing the lending in a short sale transaction. Many individual investors think that—because their shares are the ones being lent to the borrower—they will receive some benefit; but this is not the case.”Report
LOL. I didn’t know that.
So this is a scam they’re allowed to do as long as you don’t explicitly opt out of it.Report
Robinhood about to be back in business for ‘limited’ sales of the forbidden stock tomorrow:
https://www.cnet.com/personal-finance/robinhood-to-allow-limited-buys-on-gamestop-amc-on-friday/Report
Redstate weighs in:
Report
If I were forced to find a Big Picture Moral in all of this, (and since this is the internet I guess I must) it is how deep and pervasive the anti-Wall Street sentiment is in America, our 50% Republican government notwithstanding.
In 2010 when I organized MoveOn Marches and a local Occupy in Orange County CA, Reagan Country and home to Dana Rohrabacher, it was astounding that our initial march drew like 1,500 people, almost all of whom were middle class married-with-children, homeowning white collar professionals, i.e., people more at ease with the politics of National Review than Mother Jones.
And the sentiment was much that same- “We Are The 99%”, where the banksters played in the casino and then got a bailout from the taxpayers.
So the sentiment for a New New Deal exists, and in really large numbers.
The question is why the sort of people who read RedState would pull the lever for a Ted Cruz, whose main goal seems to be giving the two old guys in Trading Places a massive tax cut.Report
The CEO of webull, another trading app, says the clearing firm forced them to stop people from taking new positions in those stocks.
https://finance.yahoo.com/video/heres-why-robinhood-restricting-users-173049721.html
I don’t know enough to evaluate what he’s saying.Report
Will he say that under oath?
He’s going to be asked to.Report
https://www.schwab.com/resource-center/insights/content/stock-settlement-why-you-need-to-understand-t2-timeline
You have a stock that can increase by 5x in one day and is obviously being manipulated. So in two days it could be valued at 25x, or -25x. And the SEC may be stepping in and reversing any or all of these trades.
So how much money do all of the groups making these trades have to have on hand to make sure they’re not holding the bag in any/all of these situations?Report
They can’t reverse anything. There are two actual crimes that can be done here, and neither are being done by WSB.
First, there’s fraud. That’s artificially creating or reducing demand…via lies. Not seeing any of that.
Well, actually I am, but it’s lies on the part of people trying to decrease the price, not increase it. There seems to be a lot of very important Financial Experts being trotted out to assert this is all over and that everyone should sell and go home, in BLATANT LIES to try to stop this situation.
Meanwhile, here’s the test for market manipulation:
(1) That the accused had the ability to influence market prices; (2) that the accused specifically intended to create or effect a price or price trend that does not reflect legitimate forces of supply and demand; (3) that artificial prices existed; and (4) that the accused caused the artificial prices.
The problem here is that test #2 fails. There is a HUGE demand for the stock. Everyone wants this stock.
The first people are the moronic short sellers who have to cover their shorts. They literally are required to buy more stock than exist in the world. That’s a divide by infinite error when calculating demand.
Oh, and there’s a bunch of buyers who want to screw the hedge funds over for funsies. Hey, no one says that the demand for stock has to have the intent to make money behind it! It’s entirely legal to buy and own stock as a matter of principle.
It is possibly the most demanded stock in current market. It has a trading volume in the _tens of millions_, something like 20% of all outstanding shares! For comparison, Amazon, one of the faster growning stocks in the world, with almost ten times as many shares, has a trading volume of only three million.
Everyone wants this stock. They might want it for non-traditional reasons, but no one is manipulating the price.
If anything, the price is actually too low when weighed with supply and demand. Due to…hey, due to _market manipulation_ on the part of brokerages. Things like not letting people buy it. Huh.
The SEC can’t say ‘Well, that demand is stupid and doesn’t match corporate fundamentals’….the demand is still there, and the demand doesn’t seem to be due to lies, and that’s all that matters. They also can’t claim it’s fraud…for one reason, no one seems to be willing to allege they are a victim of any fraud.Report
“We defrauded ourselves by shorting too much stock. Therefore, our trades should be null and void and we should be fined, oh, a hundred thousand dollars or something.”Report
Incidentally, normal people can’t really be charged with market manipulation anyway. That’s an SEC regulation thing, and the important thing to remember: The SEC is a regulatory agency with authority over financial institutions. The SEC is not law enforcement, and SEC regulations are not laws. Their _rules_ have no authority over a bunch of randos on Reddit. Charging normal individuals required them breaking actual laws. (And the FBI.)
The only thing normal humans can get hit with is securities fraud, and that, like all fraud, requires lying. (And there’s insider trading and other obscure stuff, none of which replace.)
But, anyway…you realize the article you linked to is about retail traders funding their trades? It has nothing to do with short sells.Report
“normal people can’t really be charged with market manipulation anyway.”
Probably because normal people who had enough resources to manipulate the market didn’t used to organize on message boards with the express purpose of manipulating the market.
It’s sort of like how there didn’t used to be regulations on the amount of pseudoephedrine you could buy in any one transaction, and then people figured out how to use the stuff to make methamphetamines, and now there are all sorts of regulations and tracking.Report
I look forward to the future where I can no longer share my salary nor investing plans with my co-workers.Report
One where “investment experts” on the TV can no longer provide advice on which stocks to buy.Report
The belief of my much-more-stock-savvy-than-me-coworkers was the TV guys had nothing in terms of good advice.Report
{{You missed the point… Scroll back up a bit.}}Report
In RL it happened on a pretty regular basis back in my algo days. Not every week or even every month but often enough.
A stock that is bouncing around maybe 5x in one day is exactly the sort of situation where I’d be risking “erroneous trades” if I were trading it.
https://www.investopedia.com/terms/e/erroneous-trade.aspReport
Put differently, the multiple connecting parties may very reasonably want risk insurance just like a bank won’t cash a check unless you have an account with more than that in it.
And if any of those connecting parties don’t want to tie up millions of their dollars waiting for transactions to clear, then the simple alternative is to not allow the transactions.
Now I’m pretty sure our stuff cleared quicker than 2 days but we weren’t a retail shop. We were deep into “licensed professional” territory.Report
What you’re not really understanding is that reversing things doesn’t actually do anything.
The short sellers, currently, have to _purchase_ something that the market has realized is infinitely valuable, because there are people required by law to buy massive amounts of it thanks to their own stupidity.
And this is not a situation that suddenly happened. Those shorts were created _months_ ago.
There’s no recent transactions that can unhappen that will make this situation not what it is.
If the SEC undoes literally everything that happened in GME, every single transaction, in the last week…WSB will just purchase all those stocks again, immediately.
If WSB is not allowed to do that, because brokerages have limited the market, then the previous and once-again current holders will just jack up the prices instead. Or, that might just happen anyway. The prior stockholders can read the news too, and they understand they made a huge mistake selling last week for $20 when it’s worth almost $400. If you give it back to them…why would they sell it for less than $400 now? They know what it’s worth!
If anything, rewinding a week makes this _worse_…the short sellers were able to catch a few shares from people who faltered in all this, and reduced their liability from 140% of all stock to 120% of all stock. Now that people can see this worked, despite market manipulation to lower the price, people aren’t going to make that mistake again. They’ll just keep holding. And the short sellers are even deeper in the hole!
What, is the SEC going to Men-in-Black memory flash everyone? Or are they going to go back in time months and somehow erase those shorts from being made?Report
Oh I understand the situation just fine. If I were still doing this kind of thing I’d probably be trading this.
However, these are retail guys and everyone in their chain needs to worry about T+2. Some people in that chain have decided THEIR money won’t be put at risk if the SEC does something stupid (and the SEC has a LOT more control over some of them than they do the retail guys).
From the description your retail guy is dealing with RH who is dealing with someone else who might be dealing with the entity which clears this (or there may be another entity).
All of these retail guys are trying to do the same thing at the same time. When the big players try things like this they can supply covering money and don’t have so many people in the chain.Report
“no one says that the demand for stock has to have the intent to make money behind it!”
it’s amusing how you wrote this immediately after saying that that there’s no evidence the accused parties intended to create or effect a price or price trend that does not reflect legitimate forces of supply and demand, unless you think “let’s fuck over some investors for lulz” represents something a usefully-functional financial market should consider a legitimate force of supply and demand.Report
You do not understand what the concept of ‘legitimate supply and demand’ means. You think the word ‘legitimate’ means ‘objective’, whereas it really means ‘what supply and demand objectively is’.
You cannot do market manipulation by manipulating actual supply and demand. That is not market manipulation. It could be still be a crime, it could be fraud pumping up demand or insider trading cheating on demand-knowledge or a few other things, but it’s not market manipulation.
And people are allowed to want stock for any reason they want, including merely out of spite, with a specific intent to damage a third party! That’s actually somewhat common…people hate a company so much they buy stocks in a competitor.
—
Market manipulation, instead, is when people in the market do something that makes the stock appear to be in more or less demand than it is, or make it appear to have more or less supply than it does. Without supply and demand actually changing. (This is usually on the demand side, it’s rather hard to lie about the supply.)
Market manipulation is basically when a brokerage hacks the way the market works by getting the market to reflect incorrect prices. Market prices are, to a vast extent, completely automated, and there are things you can do to make them essentially ‘lie’, at least for a little bit.
For random example with no bearing on this, a brokerage could shut down purchases and not sales, making it look like there is less demand than there is. Or a brokerage could deliberately trade stocks between themselves at prices lower or higher than market prices to make the price temporarily change.
You can’t actually do market manipulation by buying the stock on the open market and holding it. The price of the market will correctly match supply and demand if everyone trades openly and clearly. To do market manipulation, you have to do complicated off-market trades, or cleverly timed things, or collude with other brokerages, or all sorts of things that make the price move without supply and demand actually changing.
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People are buying GME because they want to own that stock currently. In fact, they want to own the stock so much that brokerages have shut down their purchasing of their purchases, claiming they simply aren’t able to handle it. This is one of the most demanded stocks in modern history. There’s people filing suits and complaining to Congress that they can’t buy this stock.
The idea that the high prices are the result of market manipulation is flatly aburd. The market is currently being manipulated to keep prices low against near infinite demand.
In fact, you are literally arguing FOR market manipulation, by asserting that this demand is not ‘legitimate’ and, what…the market should alter prices to pretend that the demand doesn’t exist? That’s exactly what market manipulation is. The demand does exist. In reality. People are trying to buy it in massive amounts. Right now!Report
Sorry, that’s something like “You think the word ‘legitimate’ means ‘objective value of stock’, whereas it really means ‘what supply and demand objectively is’”Report
It’s surprising to see you so loudly and strongly defend the Efficient Markets Hypothesis, because you don’t seem like the sort of fellow to do that, but, congratulations you agree with me, again?Report
I am at a complete loss as to how you think me saying ‘Under SEC regulation, Market Manipulation requires manipulation of actual market price outside of supply and demand instead of deliberately manipulating supply and demand.’ is the same thing as the me saying ‘Effective Market Hypothesis is true’.
My comment is not talking about how markets behave in any hypothetical sense.
My comment is talking about how the accusations are that the Game Stop stock _demand_ has been inflated, by WSB, resulting in accusations of ‘Manipulation the Market’, but ‘inflating demand’ is not Market Manipulation as defined by the SEC to start with, and thus this cannot be Market Manipulation. Laws (and regulations) have specific definitions, and you cannnot just use the common-sense ‘What is the crime called?’ to figure them out.
It’s the equivalent of people asserting that airplanes should be given speeding tickets, and me pointing out that traffic laws only cover a) operation on public roads, by b) ground vehicles.This is not taking any sort of position on airplanes, or cars, or anything, it’s just pointing out that laws and regulations have specific legal definitions.
Likewise, the claim that WSB is ‘manipulating the market’ in a common way of using that term does not mean that WSB has violated the regulation disallowing ‘Market Manipulation’. Not only have they _not_ done the disallowed thing, but they actually _can’t_ violate those regulations anyway because those regulations are only applicable to brokerages.
—
As for the Efficient Markets Hypothesis: You’re somehow exactly backwards about the implications there.
If my explanation of SEC regulations is taken as ‘my position’, (instead of me just neutrally explaining rules), then my position is clearly ‘The Efficient Markets Hypothesis is not completely true’.
Because if it’s true, you couldn’t _have_ Market Manipulation as defined by the SEC, because the prices should always 100% correctly match supply and demand!Report
America’s Conscience weighs in:
Report
If this is accurate, when will we know by?
Report
Math Time:
Total Market Cap of the first 100 of the S&P 500: 25000 Billion
2% of that is 500 Billion.
The GameStop squeeze is something like $12 Billion.
https://fknol.com/list/market-cap-sp-500-index-companies.php
The talking heads on TV are dumb and simply draw a line between something in the news and the market’s movement. They could have just as easily said “GameStop investors are reinvesting their money after today’s killing” or “short sellers shrug off loss”.Report
Since there is still confusion about what market manipulation is, let me clarify what it is, and isn’t, and why retail traders can’t do it.
To be clear, they can’t be _charged_ with market manipulation to start with, as it is an SEC regulation and not a criminal law and retail traders are not subject to it. But they couldn’t do it anyway, because retail traders have pretty limited access to the market and have to go through brokers that would screw up their clever plans just because of how the market works.
Here is an example of market manipulation:
A stock is trading at $100. Two brokerages, each with a million shares, make a deal to sell to each other at $95. They start selling rapidly to each other, lowering the price as low as possible each time, essentially exchanging their shares at that price point.
So, while that’s happening, the market says the price of that stock is $95, and a bunch of automated stop-loss trigger and _other_ people sell their stock for that bogus price that they buy also. Hopefully making up the money they lost along the way as people bought their $95 stock.
That’s illegal market manipulation. (And it’s also way way way too obvious. Actual schemes are way more complicated.)
Note retail traders cannot do this. Even if they had that much stock, there are reasons it wouldn’t work…for one thing, no broker lets you deliberately sell that low compared to current market price. Your brokerage won’t let you sell something for $95 that the market is giving $100 for, you have to sell for $100…which people assume is to protect them from mistakes, but is actually to stop this sort of market manipulation. Brokerages are not supposed to do this, so they aren’t going to let their clients make trades like that.
So you’d have to keep lowering the price yourself, by pennies each time, and the entire premise here is that the thing has to happen almost instantly (To trip people’s standing stop-losses.) before people caught on. Brokerages can set up price-death spirals…random investors cannot.
I’m not actually sure brokerages can do this anymore either! At least not this simply. But there are much more complicated ways to do that…taking advantange of shorts, direct off-market sales, all sorts of things. Things retail traders don’t have access to at all.
And hence cannot manipulate the market.
—
Here’s what _isn’t_ market manipulation: A guy starts spreading a lie on the internet that the company is valueless, causing the demand for the stock to drop and the price to lower to $80. He then buys a bunch of it.
That’s securities fraud, not market manipulation.
Market manipulation is hacking the supposed market price via stock trading trickery, not convincing human beings they want or don’t want a stock.
—
What actually just happened here is that retail traders just invented the stock market version of a union. It’s why they keep saying ‘hold the line’ and encouraging each other not to sell out. It’s the stock equivalent of ‘don’t scab’.
And there are no regulations whatsoever that cover this. And, as I have pointed out before, unions without any regulations are a lot more powerful than people think, labor law actually exists to box unions in. Well, it turns out that they’re even more powerful when someone creates them inside a very very restricted universe and the companies can’t just send a few people to bash in the leaders’ heads.Report
That remains to be seen. A group can take advantage of stupid-rich who have deliberately painted themselves into a corner. I have doubts whether that group can do anything in a different situation. The market is very large and mostly self correcting. What we’re seeing may be an example where someone was going to “correct” these idiots and it doesn’t really matter who.
Companies don’t need unity and have the power of the purse.
During the last 80 or so years the violence has been on the part of the unions, not the companies.
Wiki struggles to find any anti-union violence in the US past the 1930s and even then it’s pretty vague. The section on union violence doesn’t have that issue.
https://en.wikipedia.org/wiki/Union_violence_in_the_United_StatesReport
Violence is what you use when you don’t have the law on your side.Report
The VAST bulk of that violence is directed against fellow members of their union, members of other unions, random people in general to make a point, or “scabs” (i.e. people who want jobs).
The union’s problem is they mostly don’t have a role that justifies the cost of their existence. I need a job. I need money. I need a union… why? Because I’ll get beaten up by the union if I say no? How is that superior than just not having a union in the first place?
A union’s job is to deal with an abusive management. If my management isn’t abusive, or if I have other job alternatives, I don’t need them.Report
I’d like to see your list of unions that attacked ‘fellow members of their own union’ or ‘members of other unions’ or even ‘random people in general to make a point’?
Almost every single example of union violence has been against workers or owners at the company they are striking against…or the people actually physically assaulting them. I think you _maybe_ can find some examples of unions attacking customers who crossed picket lines, but that’s pretty rare.
The only real counter example I can think of is the Dupont Plaza Hotel thing, which was…done by three union members who decided to support the union, not the union. There was a pretty detailed investigation, and the union had nothing to do with it. And it was an attempted ’cause a small fire to discourage hotel visitors’, not ‘burn down the hotel and kill a hell of a lot of people’. I’m not excusing the level of stupidity to play around with fire, but that was what it was, stupidity, it wasn’t intended to physically hurt anyone.Report
LOL. Did I say that companies could crack heads now? No, they can’t. They just bring in overseas labor illegal and work them in sweatshops. Or union bust with undercover agents stirring dissent.
But as Chip Daniels pointed out: The fact that labor sometimes feels so disadvantaged and unable to get anything they need that they resort then to violence isn’t _actually_ a disagreement with my claim that labor laws exist to box labor in. It’s a confirmation of that.
Here’s the fun thing: Freedom is just another word for nothing left to lose. I know that’s just a song lyric, but it’s actually true, people who have nothing to lose are, indeed, completely free, and nothing matters to them.
Labor laws attempt to ensure that a large enough mass of workers don’t quite have nothing. That they feel they have some chance, however small, of winning. It gives them a framework to win within, even if 95% of the time they don’t. And it removes the 5% of _really_ abusive setups.
You have to give them that chance. You have to give them something to lose, even if it’s just hope.
Because you know what’s more powerful than the power of the purse?
A few grams of gunpowder and a small amount of lead.Report
BTW, I feel I should point out that your history is probably _very_ skewed if you’re getting it from Wikipedia. History is written by the wealthy.
For example, here’s a thing that happened less than 40 minutes from me, in 1951:
http://historymatters.gmu.edu/d/6466/
Now, why is this not on the list of anti-union violence? Or on Wikipedia _at all_? Hmm.
But is that only one? No: https://againstthecurrent.org/atc068/p811/
That list, and Wikipedia in general, is amazingly devoid of actual examples of actual violence directed at unions.Report
1) You are still not explaining why a union is a good thing for me rather than a bad thing. Thus far you’ve presented no “union is good” arguments at all.
2) Feel free to put some of your history into wiki… although some of that might be urban myth rather than history.
3) Even if everything you’ve said is true, the bulk of the violence is union violence. You and Chip have even admitted as much with statements about “desperation” and “the law isn’t on their side”.
Why should we change the law if you can’t present any “union is good” arguments? If the only thing they bring to the table is a lack of their own violence, then the law isn’t the problem.Report
I would think that the fact that union labor is more expensive is by itself a pretty good argument for unions.Report
Maybe. I get paid a lot.
20+ years ago my employer stole money from me (and the irs, and all the other workers, etc) and it’s corporate officers ended up jailed.
They were a contracting company so I was able to get the same job working for someone else… at 45% more.
When a picture what would have happened if a union was involved, maybe the theft wouldn’t have happened (or maybe it would have), but I seriously doubt that I would have been allowed to get an individual raise like that.
And even that is assuming that the union’s interests are always aligned with my own. If they call a strike and I want to (or have to) keep working, are they going to be cool with that? What is it that is supposed to happen there?Report
I posted it. Especially damning is the last part where it says companies often don’t press charges (and law enforcement is reluctant to press them) against unions so that list is far from complete.
This is like saying Trump had nothing to do with the riot.
I wasn’t inviting excuses on why union violence is legit, or why they “need” to resort to it.
I was inviting an explanation on how a union would benefit me. What are my unmet needs that a union could fill? Why would I be better off if I were in a union? Why should we change the laws?
And btw if you feel the need to quote a situation that hasn’t existed for 80 years then you might as well put “they used to be useful”.Report
This reporter uses the term “day trading” in this story, but doesn’t explain what that means, and he uses it in a context that isn’t really applicable or even correct. Day trading is a term usually used to describe the practice of buying and selling positions in the same trading day. It’s generally done in relatively high volume, so small gains on each trade add up throughout the course of the trading day.
These retail traders are buying and holding positions of specific stocks in order to limit availability and drive the price up (supply and demand 101). It really has nothing to do with “day trading”.Report
Not anymore! Now it means “amateurs”.
There are “Real Traders” and there are “Day Traders”.Report
Whenever I see it used in that context I can’t help but think of Indigo Montoya:
“You keep saying that word. I do not think it means what you think it means.”Report
GME trading at 230.00 and falling off a cliff.Report
I get the short squeeze… what I never saw fully explained was the exit strategy… how do you trade the squeeze run-up into Real Property without crashing the squeeze? For Some, for Many, for All?
I’m wondering how the categories break down:
1. Large investors who wanted to take-over GME (Chewy)
2. Large investors squeezing @ $4 exiting at, say, $400 (Pro’s)
3. ‘Day Traders’ seeing the Short exposure in 2020 and investing at $4, $10, $20
4. Redditors joining the frenzy at, say, $100 in 2021 – but moving significant chips, say $15k+
5. The horde throwing $90 (JB’s boss) for a single share to “stick it to the man”
If the losses belong mostly to #5, then it’s a Robinhood tale… if the losses will hang on #4… then there will be much schadenfreude. If there are no losses, well then I will be amazed.Report
I think the “sticking it to the man” theory explains maybe 2-3% (TOPS!) of the people buying it. The dumb money that said “it’s going up? YOU BUY STOCK WHEN STOCK GOES UP!” without knowing a dang thing about anything else is probably responsible for another 17-18%.
And after that, I think it’s the big boys just pushing chips around on the table.Report
True enough… I read that approx $9B of the $13B lost went to #1 & #2… so let me rephrase that most is going to those groups… so I guess my question is: who eats the $4B on the way down? (Assuming that some portion of #2 cashed-out)
I’m assuming that Chewy sold enough so that their initial investment and 3-board seats are covered by the squeeze play… so they may ‘give back’ some of the paper gains, but will end-up with a ‘free’ 9% stake in the company.
I’m guessing the Pro’s playing the short/gamma squeezes were happy to trade upside to redditors for real money.
Does RoaringKitty cash-out $20M, $15M, $10M, $5M? When does he cross the line from hero to sell-out?Report
The Redditors should realize one thing here: the establishment always wins. Some plucky young hedgefund, or perhaps a stately old hedgefund, will have shorted GME at the right time and ultimately will make a killing. That strikes me as inevitable. Can’t bankrupt all of ’em. As self-interested individuals, they should get out now, call it a good months work.Report
$116.
Personally, I found the arguments saying that Gamestop’s fundamentals indicate something between $10 and $20 to be persuasive. Maybe not, you know, for 2030.
But they’re in Autumn days of Blockbuster territory. Winter is coming, but it has not yet snowed. The PS5 and XBox Whatever are not yet fully market penetrated and the whole “give away the razor, sell the blades!” trick works well with consoles. (I could rattle off a handful of games that I am looking forward to already… Spider-Man, God of War, Horizon… And I still prefer Gamestop to Amazon, or I would, if there weren’t a pandemic.)Report
Jan 27: Hold the Line!
Feb 2: No U!Report
Gamestop now back up to $232, after getting as low as $40 on February 18th.Report